MAHINDRA UGINE STEEL COMPANY LIMITED · · 2015-09-14cmyk 45th Annual Report 2007-2008 MAHINDRA...
Transcript of MAHINDRA UGINE STEEL COMPANY LIMITED · · 2015-09-14cmyk 45th Annual Report 2007-2008 MAHINDRA...
ANNUAL REPORT 2007-2008
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Keshub Mahindra — Chairman
Anand G. Mahindra — Vice Chairman
K. V. Ramarathnam — Managing Director
Deepak Dheer — Executive Director
Dr. Homi N. Sethna
M. R. Ramachandran
R. R. Krishnan
Hemant Luthra
Rajeev Dubey
S. Ravi
K.B.Saha (nominee of LIC)
EXECUTIVE VICE PRESIDENT – FINANCE & MIS
R. Sundaresan
COMPANY SECRETARY
Ajay Kadhao
BOARD OF DIRECTORS
CONTENTS PAGE NO.
Notice .................................................................. 2
Directors’ Report ................................................. 9
Management Discussion & Analysis ................ 19
Report on Corporate Governance ................... 23
At a Glance ....................................................... 35
Auditors’ Report ................................................ 36
Balance Sheet .................................................. 40
Profit and Loss Account ................................... 41
Cash Flow Statement ....................................... 42
Schedules ......................................................... 44
BANKERSState Bank of IndiaDena BankBank of BarodaBank of IndiaING Vysya Bank Ltd.Standard Chartered BankDBS Bank Ltd.Yes Bank Ltd.IDBI Bank Ltd.
AUDITORSM/s. A. F. Ferguson & Co.
SOLICITORSM/s. Khaitan & Co.
REGISTERED OFFICE74, Ganesh Apartment,Opp. Sitaladevi Temple,L.J. Road, Mahim,Mumbai - 400016.Tel. No. : 022-24444287 Telefax : 022-24458196website: www.muscoindia.comE-mail: [email protected]@mahindra.com
WORKSSteel:Jagdishnagar, Khopoli - 410 216,District Raigad, MaharashtraTel. No. : 02192-263318/347Fax No. : 02192-263073/6
Stampings :1. 371, Takwe Road, At & Post: Kanhe,
Dist. Pune - 412 106.Tel. No. : 02114-255289/294, Fax No. : 02114-255293
2. Plot No. D-2, MIDC, Ambad, Nashik- 422 010.Tel. No. : 0253-2387510/11/12/13,Fax No. : 0253-2382876
3. Maharajpur Road, Lalpur, Rudrapur(U.S.Nagar), Uttarakhand - 263143Tel No. : 05944-280921
REGISTRAR & TRANSFER AGENTSSharepro Services (India) Pvt. Ltd.Satam Estate, 3rd Floor, Above Bank of Baroda,Cardinal Gracious Road, Chakala, Andheri (East),Mumbai - 400 099.Tel.: 022-28215168/67720400Fax: 022-28375646
— Please bring your copy of the Annual Report
at the Meeting.
MAHINDRA UGINE STEEL COMPANY LIMITED
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NOTICE
The Forty–fifth Annual General Meeting of the Members
of MAHINDRA UGINE STEEL COMPANY LIMITED
will be held on Thursday, the 24th day of July, 2008 at
3.00 p.m. at Amar Gian Grover Auditorium, Lala Lajpat
Rai Marg, Mahalaxmi, Haji Ali, Mumbai – 400 034, to
transact the following business:
ORDINARY BUSINESS:
1) To receive and adopt the audited Balance Sheet
as at 31st March, 2008 and the Profit and Loss
Account for the year ended on that date and the
Reports of the Directors and the Auditors thereon.
2) To declare Dividend on Equity Shares.
3) To appoint a Director in place of Mr. Hemant
Luthra, who retires by rotation and being eligible,
offers himself for re-appointment.
4) To appoint a Director in place of Mr. R.R. Krishnan,
who retires by rotation and being eligible, offers
himself for re-appointment.
5) To appoint a Director in place of Mr. S. Ravi, who
retires by rotation and being eligible, offers himself
for re-appointment.
SPECIAL BUSINESS
6) To consider and, if thought fit, to pass, with or
without modification(s), the following resolution as
an Ordinary Resolution:
“RESOLVED that subject to the provisions of
sections 224, 225 and other applicable provisions,
if any, of the Companies Act, 1956, M/s. Deloitte
Haskins & Sells, Chartered Accountants, be
appointed as the Statutory Auditors of the
Company to hold office from the conclusion of this
Annual General Meeting until the conclusion of
the next Annual General Meeting, in place of the
retiring Auditors M/s. A.F.Ferguson & Co.,
Chartered Accountants, to conduct the audit of
the Accounts of the Company for the Financial
Year 2008-09, on such remuneration as may be
mutually agreed upon between the Board of
Directors of the Company and the Auditors, plus
service tax and out of pocket expenses.”
7) To consider and, if thought fit, to pass, with or
without modification(s), the following resolution as
a Special Resolution:
“RESOLVED that pursuant to the provisions of
sections 198, 269, 309, 310, 311 and all other
applicable provisions of the Companies Act, 1956
(the Act), (including any statutory modification or
re-enactment thereof for the time being in force),
read with Schedule XIII of the Act and subject to
the approval of the Central Government, if
necessary, and such other approvals, permissions
and sanctions, as may be required and subject to
such conditions and modifications, as may be
prescribed or imposed by any of the authorities in
granting such approvals, permissions and
sanctions, approval of the Company be accorded
to the revision in remuneration payable to Mr. K.
V. Ramarathnam as the Managing Director of the
Company (hereinafter referred to as “Managing
Director”), with effect from 1st April, 2007, for the
reminder of his term of office, as follows:
Salary : Rs.2,25,000/- per month in the scale of
Rs.1,10,000/- to Rs.2,25,000/- per month.
Perquisites : In addition to the salary, the Managing Director
shall be entitled to the following perquisites in
accordance with the rules of the Company.
i) Housing : Furnished residential accommodation or House
Rent Allowance of 60% of salary in lieu thereof;
ii) Gas, Electricity & : The expenditure incurred on gas, electricity, water
Water will be borne by the Company subject to Income
Tax rules;
iii) Medical : Expenses incurred for the Managing Director and
re-imbursement his family as per the Company’s rules;
iv) Leave Travel : For Managing Director and his family, once in a
Concession year, incurred in accordance with the Company’s
rules;
v) Club Fees : Fees of clubs, subject to a maximum of two Clubs.
This will not include admission and life membership
fees;
vi) Personal Accident : Premium as per the Company’s rules;
Insurance
vii) Contribution to : Contribution to Provident Fund, Superannuation
Funds Fund, Gratuity Fund as per the Company’s rules;
viii) Encashment of : Encashment of leave not availed of by the
Leave Managing Director as per the Company’s rules;
ix) Provision of a car : Provision of a car and telephone at the Managing
and telephone Director’s residence for his use as per Company’s
rules;
x) Other benefits : Such other benefits, amenities and facilities as
per the Company’s rules.
The value of perquisites would be evaluated as per Income Tax Rules, 1962
wherever applicable and at cost in the absence of any Rule.
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ANNUAL REPORT 2007-2008
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Commission:
In addition to the salary and perquisites, the
Managing Director would be entitled to such
commission based on the net profits of the
Company in any financial year not exceeding one
per cent of such profits as the Remuneration
Committee shall decide, having regard to the
performance of the Company.
Provided that the remuneration payable to the
Managing Director (including the salary,
commission, perquisites, benefits and amenities)
does not exceed the limits laid down in sections
198 and 309 of the Companies Act, 1956, including
any statutory modifications or re-enactment thereof.
FURTHER RESOLVED that where in any financial
year during the currency of the tenure of the
Managing Director, the Company has no profits or
its profits are inadequate, the Company may pay
to the Managing Director remuneration by way of
salary, perquisites and other allowances and
benefits as specified above as the minimum
remuneration subject to the receipt of the requisite
approvals, if any, for the remaining period of his
appointment.
FURTHER RESOLVED that for the purpose of
giving effect to this resolution the Board of Directors
of the Company (hereinafter referred to as the
‘Board’ which term shall be deemed to include
any duly authorised Committee thereof, for the time
being exercising the powers conferred on the Board
by this resolution) be authorised to do all such
acts, deeds, matters and things as it may, in its
absolute discretion, deem necessary, proper or
desirable and to settle any questions, difficulties
or doubts that may arise in this regard and further
to execute all necessary documents, applications,
returns and writings as may be necessary, proper,
desirable or expedient.”
8) To consider and, if thought fit, to pass, with or
without modification(s), the following resolution as
a Special Resolution:
“RESOLVED that pursuant to the provisions of
Sections 269, 198, 309, 310, 311 and all other
applicable provisions of the Companies Act, 1956
(the Act) (including any statutory modification or
re-enactment thereof for the time being in force)
read with Schedule XIII of the Act subject to the
approval of the Central Government, if necessary,
and such other approvals, permissions and
sanctions, as may be required, and subject to such
conditions and modifications, as may be prescribed
or imposed by any of the authorities in granting
such approvals, permissions and sanctions,
approval of the Company be accorded to the re-
appointment of Mr. K.V.Ramarathnam as the
Managing Director of the Company (hereinafter
referred to as ‘Managing Director’) for a period of
three years with effect from 5th May, 2008.
FURTHER RESOLVED that the salary, perquisites
(including allowances) payable or allowable and
commission to the Managing Director be as follows:
Salary : Rs.2,25,000/- per month in the scale of
Rs.1,10,000/- to Rs.2,25,000/- per month.
Perquisites : In addition to the salary, the Managing Director
shall be entitled to the following perquisites in
accordance with the rules of the Company;
i) Housing : Furnished residential accommodation or House
Rent Allowance of 60% of salary in lieu thereof;
ii) Gas, Electricity : The expenditure incurred on gas, electricity, water
Water will be borne by the Company subject to Income
Tax rules;
iii) Medical : Expenses incurred for the Managing Director and
re-imbursement his family as per the Company’s rules;
iv) Leave Travel : For Managing Director and his family, once in a
Concession year, incurred in accordance with the Company’s
rules;
v) Club Fees : Fees of clubs, subject to a maximum of two Clubs.
This will not include admission and life membership
fees;
vi) Personal Accident : Premium as per the Company’s rules;
Insurance
vii) Contribution to : Contribution to Provident Fund, Superannuation
Funds Fund, Gratuity Fund as per the Company’s rules;
viii) Encashment of : Encashment of leave not availed of by the
Leave Managing Director as per the Company’s rules;
ix) Provision of a car : Provision of a car and telephone at the Managing
and telephone Director’s residence for his use as per Company’s
rules;
x) Other benefits : Such other benefits, amenities and facilities as
per the Company’s rules.
The value of the perquisites would be evaluated as per Income Tax Rules,
1962 wherever applicable and at cost in the absence of any such Rule.
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MAHINDRA UGINE STEEL COMPANY LIMITED
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Commission:
In addition to the salary and perquisites, the Managing
Director would be entitled to such commission based
on the net profits of the Company in any financial year
not exceeding one per cent of such profits as the
Remuneration Committee shall decide, having regard
to the performance of the Company.
Provided that the remuneration payable to the
Managing Director (including the salary, commission,
perquisites, benefits and amenities) does not exceed
the limits laid down in sections 198 and 309 of the
Companies Act, 1956, including any statutory
modifications or re-enactment thereof.
FURTHER RESOLVED that where in any financial year
during the currency of the tenure of the Managing
Director, the Company has no profits or its profits are
inadequate, the Company may pay to the Managing
Director the above remuneration as the minimum
remuneration for the remaining period of his tenure by
way of salary, perquisites and other allowances and
benefits as specified above as the minimum
remuneration subject to the receipt of the requisite
approvals, if any.
FURTHER RESOLVED that for the purpose of giving
effect to this resolution the Board of Directors of the
Company (hereinafter referred to as the ‘Board’ which
term shall be deemed to include any duly authorised
Committee thereof, for the time being exercising the
powers conferred on the Board by this resolution) be
authorised to do all such acts, deeds, matters and
things as it may, in its absolute discretion, deem
necessary, proper or desirable and to settle any
questions, difficulties or doubts that may arise in this
regard and further to execute all necessary documents,
applications, returns and writings as may be necessary,
proper, desirable or expedient.”
NOTES:
(a) Explanatory statement pursuant to Section 173(2)
of the Companies Act, 1956 is annexed hereto.
(b) A MEMBER ENTITLED TO ATTEND AND VOTE
AT THE MEETING IS ENTITLED TO APPOINT A
PROXY TO ATTEND AND VOTE INSTEAD OF
HIMSELF/HERSELF AND A PROXY NEED NOT
BE A MEMBER. THE INSTRUMENT APPOINTING
THE PROXY MUST BE DEPOSITED WITH THE
COMPANY AT IT’S REGISTERED OFFICE NOT
LESS THAN 48 HOURS BEFORE THE
COMMENCEMENT OF THE MEETING.
(c) The Register of Members and Share Transfer
Books of the Company will remain closed from
11th July, 2008 to 24th July, 2008 (both days
inclusive).
(d) The dividend, as recommended by the Board of
Directors, if declared at this Annual General
Meeting, will be paid to those shareholders whose
names appear in the Register of Members after
giving effect to all valid transfer deeds in physical
form lodged with the Company on or before 10th
July, 2008 and in respect of shares held in the
dematerialised form to those Members whose
names appear in the statements as furnished by
the depositories for the purpose as at the end of
the business hours on 10th July, 2008. The dividend
declared shall be paid within the prescribed time
limit.
(e) In accordance with the provisions of Section 205C
of the Companies Act, 1956, the Company has
transferred unclaimed matured Fixed Deposits and
interest on fixed deposits as on 31st March, 2001
to the Investor Education and Protection Fund of
the Central Government.
(f) Members are requested to write to the Company
Secretary at least ten days before the Meeting for
obtaining any information as regards accounts and
operations of the Company so that the same could
be compiled in time.
(g) Consequent upon the introduction of Section 109A
of the Companies Act, 1956, shareholders are
entitled to make nomination in respect of shares
held by them in physical form. Shareholders
desirous of making nomination are requested to
send their requests in Form No. 2B in duplicate
(which will be made available on request) to the
Registrar and Transfer Agents of the Company.
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ANNUAL REPORT 2007-2008
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(h) Members are requested to:
(i) intimate to the Company or its Registrar and
Transfer Agents viz. Sharepro Services (India)
Pvt. Limited, Satam Estate, Cardinal Gracious
Road, Chakala, Andheri (East), Mumbai – 400
099, about changes if any, in their registered
address for correspondence, at an early date,
in case of shares held in physical form;
(ii) intimate to their respective Depository
Participant, about changes, if any, in their
registered addresses for correspondence, at
an early date, in case of shares held in
dematerialized form;
iii) quote Folio Numbers or Client ID and DP ID
numbers in all correspondence.
(i) Members who hold shares in dematerialised mode
are requested to bring their Client ID and DP ID
numbers for easy identification of attendance at
the Meeting.
(j) Members holding shares under multiple folios in
the identical order of names are requested to
consolidate their holdings into one folio.
(k) Appointment/Re-appointment of Directors.
In respect of the information to be provided under
Clause 49 of the Listing Agreement pertaining to the
Directors being appointed/re-appointed, Members are
requested to kindly refer the Chapter on Corporate
Governance in the Annual Report.
By Order of the Board
Ajay Kadhao
Company Secretary
Registered Office:
74, Ganesh Apartment,
Opp. Sitaladevi Temple,
L.J.Road, Mahim,
Mumbai-400 016.
29th April, 2008.
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MAHINDRA UGINE STEEL COMPANY LIMITED
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EXPLANATORY STATEMENT PURSUANT TO
SECTION 173(2) OF THE COMPANIES ACT, 1956
ITEM NO.6.
The Statutory Auditors M/s. A. F. Ferguson & Co.,
Chartered Accountants, retire at the ensuing Annual
General Meeting. M/s. A. F. Ferguson & Co., Chartered
Accountants, are now part of M/s. Deloitte Haskins &
Sells, Chartered Accountants. Accordingly, M/s. A.F.
Ferguson & Co., Chartered Accountants, have not
offered themselves for re- appointment at this AGM.
Further, the Company has received a Special Notice
from a Member of the Company under sections 190
and 225 of the Companies Act, 1956 (‘the Act’)
signifying the Member’s intention to propose the
appointment of M/s. Deloitte Haskins & Sells, Chartered
Accountants, as the Statutory Auditors of the Company
from the conclusion of this Annual General Meeting till
the conclusion of the next Annual General Meeting.
M/s. Deloitte Haskins & Sells, Chartered Accountants,
have also expressed their willingness to act as the
Statutory Auditors of the Company, if appointed and
have further confirmed that the said appointment, if
made, would be in conformity with the provisions of
section 224(1B) of the Act.
In view of the above and based on the
recommendations of the Audit Committee, the Board
of Directors has, at its Meeting held on 29th April, 2008,
recommended the appointment of M/s. Deloitte Haskins
& Sells, Chartered Accountants, as the Statutory
Auditors in place of M/s. A. F. Ferguson & Co., for the
Financial Year 2008 -09.
The Members approval is being sought to the
appointment of M/s. Deloitte Haskins & Sells, Chartered
Accountants, as the Statutory Auditors and to authorize
the Board of Directors, on the recommendation of the
Audit Committee, to determine the remuneration
payable to the Auditors.
The Directors recommend the resolution for the
approval of the Members.
None of the Directors of the Company is concerned or
interested in this resolution.
Item No.7.
The Board of Directors of the Company at its Meeting
held on 24th October, 2007 has, pursuant to the
approval of Remuneration Committee of the Board and
subject to approval of the Members, approved the
revision in remuneration payable to
Mr.K.V.Ramarathnam, Managing Director of the
Company with effect from 1st April, 2007 for the
remainder of his term of office. The Remuneration
payable to Mr.K.V.Ramarathnam is in line with the
current compensation paid by other companies in the
group and also taking into account the market trends.
The revised terms of remuneration including
Commission payable to Mr. Ramarathnam are set out
in the special resolution under Item No.7 of the notice.
Pursuant to sections 198, 309, 310, 311 and all other
applicable provisions of the Companies Act, 1956 (“the
Act”), including Schedule XIII to the Act, the item
relating to revised remuneration payable to
Mr. Ramarathnam is now being placed before the
Members in this Annual General Meeting for their
approval by way of a special resolution.
The additional information as required under Schedule
XIII of the Act is given in the Explanatory Statement to
Item No.8.
In compliance with the requirements of section 302 (2)
of the Companies Act, 1956, an abstract of the terms
of revised remuneration has already been sent to all
the Members of the Company.
The Directors recommend this resolution as a special
resolution for approval of the Members.
Apart from Mr. K.V. Ramarathnam, who would be
interested in the revision of his remuneration, none of
the other Directors is concerned or interested in this
resolution.
Item No. 8.
The term of office of Mr. K.V. Ramarathnam, Managing
Director of the Company expires on 4th May, 2008.
The Board of Directors of the Company, subject to the
approval of the Members, has re-appointed Mr. K.V.
Ramarathnam as the Managing Director of the
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ANNUAL REPORT 2007-2008
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Company for a period of 3 years w.e.f. 5th May, 2008
on the terms and conditions as set out in the Special
Resolution under Item No.8. The Company has sent
to the shareholders an abstract of terms of his re-
appointment as required under section 302(2) of the
Companies Act, 1956. The remuneration payable to
Mr. K.V. Ramarathnam is in line with the current
compensation package for the Managing Directors of
other companies in the group and also the industry in
general.
Your Directors recommend this resolution as a special
resolution for approval of the Members.
Apart from Mr. K.V. Ramarathnam, who would be
interested in his re-appointment, none of the other
Directors is concerned or interested in this resolution.
The following additional information as required under
Schedule XIII to the Companies Act, 1956 is given
below -
I. General Information:
1. Nature of Industry
The Company is engaged in the manufacture of
alloy and special steel products and also pressed
sheet metal components and assemblies.
2. Date or expected date of commencement of
commercial production: May, 1968.
3. In case of new companies expected date of
commencement of activities as per project
approved by financial institutions appearing in
the prospectus: Not applicable.
4. Financial Performance based on given
indicators as per audited financial results for
the year ended 31st March, 2008:
Particulars (Rs. in Crores)
Sales & Other Income 924.94
Net Profit after Tax as per Profit 29.49
& Loss Account
Profit as computed under Section 45.08
309(5) read with Section 198 of
the Companies Act.
Net Worth 189.00
5. Export Performance and Net Foreign Exchange
Collaborations:
The FOB Value of Exports of the Company for the
year ended 31st March, 2008 was Rs.5.02 Crores.
The Company does not have any collaboration
that has resulted in any earnings or outgo of foreign
exchange.
6. Foreign investments or collaborators, if any:
Not applicable.
II. Information about the appointee:
Mr. K. V. Ramarathnam
1. Background details, job profile and suitability-
Mr. K. V. Ramarathnam is a Graduate in
Mechanical Engineering from University of Madras
and has rich experience of 37 years in Steel and
related industries.
Mr. K. V. Ramarathnam was SBU Head (Steel
Division) of Perkasa Indobaja, Subang, Indonesia,
(Texmaco Group) for more than 5 years heading
Seamless Tubes, Hot Rolling Mill, Steel Melting Shop.
Mr. K. V. Ramarathnam was also associated as a
Key Personnel for more than 17 years with Kalyani
Steels Ltd. and Kalyani Seamless Tubes Ltd.
Mr. K. V. Ramarathnam has handled all areas of
operations including Production, Marketing,
Process and equipment selection, Project appraisal
and implementation, Cost Control, Recruitment &
Training, review of all MIS & action plans, Funds
Flow management etc. Mr. K. V. Ramarathnam
has widely traveled on different assignments and
is an effective team leader.
2. Past remuneration during the financial year
ended 31st March, 2008 -
During the financial year ended 31st March, 2008,
the Company paid Rs. 58,09,218/- as remuneration
to Mr. K. V. Ramarathnam (in the basic scale of
Rs. 2,25,000/- per month and other perquisites and
benefits). Apart from above remuneration a
commission of Rs. 20,64,000/- for the year 2007-
08, is payable to Mr. K. V. Ramarathnam.
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3. Recognition or awards -
There was no external recognition or award.
4. Remuneration proposed -
Salary of Rs.2,25,000/- in the scale of Rs. 1,10,000/-
to Rs.2,25,000/- per month and other perquisites,
allowances and Commission as fully set out in
item No.8. of this notice.
5. Comparative remuneration profile with respect
to industry, size of the Company, profile of the
position and person (in case of expatriates the
relevant details would be with respect to the
country of his origin) -
Taking into consideration the size of the Company,
the profile of Mr. K. V. Ramarathnam, the
responsibilities shouldered by him, the
remuneration proposed to be paid is commensurate
with the remuneration packages paid to his similar
level counterparts in other companies.
6. Pecuniary relationship directly or indirectly with
the Company or relationship with the
managerial personnel, if any -
Besides the remuneration proposed to be paid to
Mr. K. V. Ramarathnam, he does not have any
other pecuniary relationship with the Company or
relationship with any other managerial personnel
and Directors.
III. Other Information:
1. Reason of loss or inadequate profits -
Not applicable, as the Company has posted a net
profit after tax of Rs. 29.49 crores during the year
ended 31st March, 2008.
2. Steps taken or proposed to be taken for
improvement and expected increase in
productivity and profits in measurable terms -
Not applicable as the Company has adequate
profits. The Company posted a net profit of Rs.29.49
crores for the year ended 31st March, 2008.
IV. Disclosures:
The information and disclosures of the
remuneration package of the managerial personnel
have been mentioned in the Annual Report in the
Corporate Governance Report Section under the
Heading “Remuneration to the Managing Director
and Executive Director for the year ended 31st
March, 2008”.
By Order of the Board
Ajay Kadhao
Company Secretary
Registered Office:
74, Ganesh Apartment,
Opp. Sitaladevi Temple,
L.J.Road, Mahim,
Mumbai-400 016.
29th April, 2008.
ANNUAL REPORT 2007-2008
9
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DIRECTORS’ REPORT
The Directors present their Forty-fifth Report togetherwith the audited accounts of your Company for theyear ended 31st March, 2008.
FINANCIAL RESULTS
(Rupees in crores)
2007-08 2006-07
Gross Income 924.94 718.91
Profit before Interest andDepreciation 99.53 96.73
Less: Interest 28.63 11.83
Less: Depreciation 26.71 16.73
Profit before Tax andExceptional Item 44.19 68.17
Less: Provision for Taxation
- Current Tax 10.55 24.82
- Deferred Tax 4.15 (1.55)
Profit after Tax 29.49 44.90
Balance of profit broughtforward from earlier years 49.07 37.33
Profit available forAppropriation 78.56 82.23
Less: Interim dividend paidon preference Shares — 0.22
Less: Interim Dividend paidon equity shares — 6.50
Less: Proposed Dividendon Equity Shares 9.74 8.12
Less: Tax on Dividend 1.66 2.32
Less: Transfer toGeneral Reserves 2.95 16.00
Balance Carried Forward 64.21 49.07
DIVIDEND
In view of pressures on the profit margins of theCompany, your Directors have recommended adividend of 30% (Rs.3.00 per share) as against 45%(includes Interim dividend of Rs.2.00 per share andFinal dividend of Rs. 2.50 per share aggregatingRs. 4.50 per share) paid for the previous year. Thedividend on equity shares, together with the tax on
distributed profits, will absorb a sum of Rs. 11.40 crores(previous year Rs.16.91 crores) and will be paid tothose Members of the Company who are entitled toreceive the same as on the book closure date.
PERFORMANCE
Your Company manufactures Alloy and Special steelproducts and is also in the business of press metalsheets/stampings. The year under review continued towitness unprecedented increase in the cost of majorraw materials namely pig iron, sponge iron andshredded scrap metals. The cost of power alsoincreased significantly during the year. Due to thesefactors coupled with high costs of borrowings, theoperating profits of your Company have been impacted.
During the year under review, while the gross incomeof the Company grew by about 28.66% from Rs.718.91crores to Rs.924.94 crores, the profit after tax for theyear was Rs.29.49 crores as compared to Rs. 44.90crores for the previous year.
STEEL BUSINESS:
During the year your Company sold 1,27,290 tonnesas compared to 1,21,099 tonnes sold last year,registering a growth of about 5.11%. The sales valueincreased from Rs 585.56 crores in the previous yearto Rs. 701.37 crores. Your Company registered salesof 4112 tonnes of Bearing Races for a value ofRs.33.17 crores.
Your Company’s expansion project that will increasecapacity from 125,000 tpa to 240,000 tpa is at anadvanced stage of completion with the expectedcommissioning of the Continuous Rolling Mill duringthe F. Y. 2008-09.
Continuous efforts are on to improve the productiveefficiencies at the plant and cost reduction besideslooking at several options for metallic support. Asregards power, your Company has entered into anarrangement for wheeling of power at a lower costwhich will enable the Company to save about Rs. 1.50per unit of power consumed.
The Company also started its Bearing Racesoperations at Jamshedpur in April 2007 as part of atwo phase process that envisages the shifting ofequipment to Khopoli in the second phase. The secondphase is expected to be completed in the current year.Your Company expects to harvest the benefits of loweroperation & logistic costs by movement of theequipment to Khopoli. This approach has allowed yourCompany to move up the learning curve rapidly whilemaintaining continuity of supply and thereby retainingthe goodwill of customers.
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STAMPINGS BUSINESS:
During the year under review the Company successfullycommenced operations at Rudrapur in Uttarakhand-its third operating unit, in a conscious effort to diversifyits customer base and manufacturing footprint, whilethe Nashik unit of the Company mainly caters to theneeds of Mahindra & Mahindra Limited (M&M) andincreasingly of its Joint Venture Partner – Renault, theKanhe unit has won the confidence of and suppliessophisticated components even to those OEM’s thatcompete with M & M. The Rudrapur unit was designedto meet the needs of the Farm Equipment Sector ofM&M but with the cyclical de-growth in the TractorIndustry, the unit has diversified its customer base toboth M&M‘s Automotive Sector operations in Haridwaras well as to many of the other automotive OEM’s thathave established a base in Uttarakhand.
While the operations of the Stampings businesscontinued to be profitable, the continuous rise in steelprices has put pressure on the Automobile industrywhich in turn has resulted in pressure on the marginsof the Stamping business of the Company.
The production during the year increased from 29,500MT to 36,210 MT registering a growth of 22.75%. Salesin the corresponding period increased from 29,452 MTto 36,053 MT registering a growth of about 22.41%.The value addition on material owned and processedby the Company for third parties increased fromRs. 86.08 crores in the previous year to Rs. 135.72crores registering a growth of 57.67%.
MANAGEMENT DISCUSSION AND ANALYSISREPORT:
A detailed analysis of the Company’s performance ismentioned in the Management Discussion and AnalysisReport, which forms part of this Annual Report.
FINANCE:
During the year under review, the liquidity position ofthe Company continued to be satisfactory and theCompany successfully tied up its requirement for capitalexpenditure and working capital needs through banks.The year was marked by a spurt in the borrowingcosts.
STOCK OPTIONS:
The Remuneration Committee of your Company hasgranted 1,42,500 Stock Options to the eligibleemployees during the year under review.
Details required to be provided under the Securitiesand Exchange Board of India (Employee Stock OptionScheme and Employee Stock Purchase Scheme)Guidelines,1999 are set out in Annexure I, to this Report.
INDUSTRIAL RELATIONS:
The relations with the workers and their respectiveunions remained cordial. During the year under review,an agreement for revision of wages was signed withthe Workers’ Union of Khopoli Unit of the Company.Negotiations with the Workers Union for the KanheUnit are in progress.
SAFETY, HEALTH AND ENVIRONMENTALPERFORMANCE:
The Company has a defined policy on general health,safety and environmental conservation through whichevery employee is responsible for the observance ofthe measures designed to prevent accidents, damageto health and to avoid environmental pollution.
Safety committee members comprising representativesof workers and executives from various departmentsmeet periodically to review the situation.
DIRECTORS:
Mr. K.V. Ramarathnam, Managing Director of theCompany whose term of office as Managing Directorexpires on 4 th May, 2008 was re-appointed asManaging Director with effect from 5th May, 2008 for aperiod of three years by the Board of Directors at itsmeeting held on 29th April, 2008 subject to approval ofmembers of the Company.
Mr. Hemant Luthra, Mr. R.R. Krishnan and Mr. S. Ravi,Directors, retire by rotation at the ensuing AnnualGeneral Meeting and being eligible, offer themselvesfor re-appointment.
Mr. N.V. Khote, Director of the Company passed awayon 9th September, 2007. The Board has placed onrecord its sincere appreciation of the services renderedby him during his tenure as Director of the Company.
DIRECTORS’ RESPONSIBILITY STATEMENT:
Pursuant to Section 217(2AA) of the Companies Act,1956, the Board of Directors, based on therepresentations received from the OperatingManagement and after due enquiry, confirm that:
(i) in the preparation of the annual accounts, theapplicable accounting standards have beenfollowed;
(ii) they have, in the selection of the accountingpolicies, consulted the Statutory Auditors and thesehave been applied consistently and reasonable andprudent judgments and estimates have been madeso as to give a true and fair view of the state ofaffairs of the Company as at 31st March, 2008 andof the profit of the Company for the year ended onthat date;
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(iii) proper and sufficient care has been taken for themaintenance of adequate accounting records inaccordance with the provisions of the CompaniesAct, 1956 for safeguarding the assets of theCompany and for preventing and detecting fraudand other irregularities;
(iv) the annual accounts have been prepared on agoing concern basis.
SUBSIDIARIES
The Company had no subsidiary as on 31st March,2008.
AUDITORS:
M/s. A. F. Ferguson & Co. Chartered Accountants,,the existing statutory Auditors are now part ofM/s. Deloitte Haskins & Sells (DHS), CharteredAccountants. Accordingly, M/s. A.F. Ferguson & Co.,Chartered Accountants have not offered themselvesfor re- appointment at the ensuing Annual GeneralMeeting. The Company has received a Special Noticefrom a Member of the Company, in terms of theprovisions of the Companies Act, 1956, signifying theintention to propose the appointment of DHS as theStatutory Auditors of the Company from the conclusionof the ensuing Annual General Meeting till theconclusion of the next Annual General Meeting. DHShave also expressed their willingness to act as Auditorsof the Company, if appointed, and have furtherconfirmed that the said appointment would be inconformity with the provision of section 224 (1B) ofthe Companies Act, 1956.
PUBLIC DEPOSITS AND LOANS/ADVANCES:
An amount of Rs. 14.45 Lakhs in the aggregateconsisting of 98 matured fixed deposits had remainedunclaimed as at 31st March, 2008. Since then, 32 ofthese deposits aggregating to Rs. 5.79 Lakhs havebeen repaid.
The Company had, from 1st May, 2005 discontinuedacceptance of and renewal of deposits under theprovisions of the Companies Act, 1956 read withCompanies (Acceptance of Deposits) Rules, 1975.
The Company has not made any loans / advancesand investments which are required to be disclosed in
the Annual Accounts of the Company pursuant toClause 32 of the Listing Agreement.
CORPORATE SOCIAL RESPONSIBILITY (CSR):
As a socially responsible corporate citizen, theMahindra Group has contributed not only to theeconomic well being of the communities it interactswith, but has also enhanced their social wellbeing. Since inception, the Mahindra Group hasengaged in activities which add value to thecommunities around it.
Your Company has, contributed a sum of Rs.23.50Lakhs during the year towards Corporate SocialResponsibility initiatives.
PARTICULARS OF EMPLOYEES:
As required pursuant to Section 217(2A) of theCompanies Act, 1956 and rules framed there-under, astatement containing particulars of the Company’semployees who were in receipt of remuneration of notless than Rs. 24,00,000/- during the year ended 31stMarch, 2008 or of not less than Rs. 2,00,000/- permonth during any part of the year under review isgiven in the Annexure II to this Report.
ENERGY CONSERVATION, TECHNOLOGYABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO:
Particulars required to be disclosed under theCompanies (Disclosure of Particulars in the Report ofBoard of Directors) Rules, 1988 are set out in theAnnexure III to this Report.
ACKNOWLEDGEMENTS:
Your Directors acknowledge the continued support andco-operation from the Banks, Financial Institutions,Government Departments, Vendors, customers andemployees, which augment the growth of the Company.
For and on behalf of the Board
Keshub MahindraChairman
Mumbai: 29th April, 2008.
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ANNEXURE I TO THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2008
Information to be disclosed under the Securities and Exchange Board of India (Employee Stock Option Schemeand Employee Stock Purchase Scheme) Guidelines 1999:
(a) Options granted 10,98,000
(b) 1st Tranche 2nd Tranche
The Pricing Formula Discount of 15% on the average Discount of 15% on the averagePrice preceding the specified date Price preceding the specified-18th August 2006 date - 24th October 2007
Average Price : Average of the daily high and low of the prices for theCompany’s Equity Shares quoted on Bombay Stock Exchange Limitedduring the 15 days preceding the specified date.
The specified date: Date on which the Remuneration Committee decidedto grant options to eligible employees of the Company.
(c) Options vested 2,15,875 Options stand vested on 31st March, 2008.
(d) Options Exercised Nil
(e) The Total number of shares arising as a result of Nilexercise of Options
(f) Options Lapsed 1,10,500
(g) Variation of terms of Options At the Annual General Meeting held on 26th July, 2007, the Company haspassed a special resolution to provide for recovery of Fringe Benefit Taxfrom employees.
(h) Money realised by exercise of Options Nil
(i) Total number of Options in force 9,87,500
(j) Employee-wise details of Options granted to:
(i) Senior Managerial personnel As per Statement
(ii) Any other employee who receives a grant in Nilany one year of Option amounting to 5% ormore of Option granted during that year
(iii) Identified employees who were granted option, Nilduring any one year, equal to or exceeding1% of the issued capital (excluding outstandingwarrants and conversions) of the company atthe time of grant
(k) Diluted Earnings Per Shares (EPS) pursuant to Rs.9.04issue of shares on exercise of option calculated inaccordance with Accounting Standard (AS) 20‘Earnings per Share’
(l) Where the company has calculated employeecompensation cost using the intrinsic value of thestock options, the difference between the employeecompensation cost so computed and the employeecompensation cost that shall have been recognisedif it had used the fair value of the Options, shallbe disclosed. The impact of this difference onprofits and on EPS of the Company shall also bedisclosed.
The Company has calculated the employee compensation cost using theintrinsic value of stock options. Had the fair value method been used, inrespect of stock options granted on 18th August, 2006 and 24th,October,2007, the employee compensation cost would have been higher byRs. 1.03 Crores. Profit after tax lower by Rs.0.68 Crores and the dilutedearnings per share would have been lower by Rs.0.20.
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(m) Weighted – average exercise prices and weightedaverage fair values of options shall be disclosedseparately for options whose exercise price eitherequals or exceeds or is less than the market priceof the stock.
(n) A description of the method and significantassumptions used during the year to estimate thefair values of options, including the followingweighted – average information :
(i) risk-free interest rate 7.95%
ii) expected life 3.5 years
(iii) expected volatility 60.00%
(iv) expected dividends, and 4.32%
(v) the price of the underlying share in Rs.85.50market at the time of option grant.
STATEMENT ATTACHED TO ANNEXURE I TO THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST
MARCH, 2008.
Name of Senior Managerial Persons to whom Options granted on Options granted onStock Options have been granted 24.10.07 18.08.06
Mr.K.V.Ramarathnam Nil 100000
Mr.Deepak Dheer Nil 75000
Mr.Hemant Luthra Nil 125000
Mr.R.R.Krishnan Nil 15000
Mr.M.R.Ramachandran Nil 15000
Dr.H.N.Sethna Nil 15000
Mr.N.V.Khote* Nil 15000
Mr.S.Ravi Nil 15000
Mr. Rajeev Dubey Nil 15000
* Expired on 9th September, 2007.
Options Grand Date Exercise Price (Rs.) Fair Value (Rs.)
24th October, 2007 73.00 43.39
The fair-value of the stock options granted on 24th October, 2007 havebeen calculated using Black-Scholes Options pricing formula and thesignificant assumptions made in this regard are as follows:
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ANNEXURE II FORMING PART OF THE DIRECTORS’ REPORT
ADDITIONAL INFORMATION PURSUANT TO SECTION 217(2A) OF THE COMPANIES ACT, 1956 READWITH COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 AND FORMING PART OF THEDIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2008.
Name of Designation Qualification Date of Age / Gross Last
Employees Employment (Experience) Remuneration Employment
– in years (Rs.) held(Organisation/Designation)
Mr. K. V. Managing B.E.(Mech) 05-05-2003 60 (38) 78,73,218 SBU HeadRamarathnam* Director (Steel Division)
PerkasaIndobaga,Indonesia
Mr. Deepak Executive B.E (Mech), 20-10-2006 56(35) 69,69,682 ManagingDheer** Director PGDM, Director, Tudor
(IIM A’bad) India Limited
Notes:
1. Nature of employment is contractual, subject to termination on 3 (three) month’s notice from either side.
2. The above employees are not related to any Director of the Company.
3. *Remuneration paid includes Salary, House Rent Allowance or value of perquisites for accommodation, carperquisite value, reimbursement of medical expenses, employer’s contribution to Provident Fund and GratuityFund and all other allowances/perquisites as applicable. The above remuneration includes Commission ofRs.20,64,000 payable to Mr. K.V. Ramarathnam for the year 2007-08.
4. ** Remuneration paid includes, Salary, House Rent Allowance, Motor car expenses, re-imbursement ofmedical expenses, employer’s contribution to Provident Fund and Gratuity Fund, medical, gas electricity andall other allowances/perquisites as applicable including Commission of Rs. 19,00,000 payable for the year2007-08.
5. None of the above employees holds by himself or with his dependent children 2% or more of the equityshares of the Company.
6. Employment terms and conditions are as per the Company’s rules.
For and on behalf of the Board
Keshub MahindraChairman
Mumbai: 29th April, 2008.
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ANNEXURE III
STATEMENT PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 READ WITH THECOMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES,1988 AND FORMING PART OF THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2008.
Conservation of Energy
During the year, the Company has taken following measures for energy conservation and on reduction ofconsumption of energy. The impact of these measures is also given herein below:
Sr. No. Energy conservation measure Impact of the measure
1. A new Electric 40 MVA EBT Arc Furnace with Reduction of power 30 Kwh per ton. For thelatest Digital controlled and operating with new year total saving on melting is 4.8 Mio Kwh.generation hydraulic operated fast responseproportional valves.The furnace is operationaland operational practices established.
2. Latest technology high efficiency dust & fume An average of 45000 Kwh saving per monthextraction system has been commissioned. by introducing the new VFD controlled system.
3. Digital variable speed drive has been installed An average of 3500 Kwh per month saving.for main hoist 1 & 2 of 100T EOT crane.
4. Drives changed to VVFD
- For wire feeding machine at LF. An average of 3000 Kwh per month saving.
- Hot Saw machine at BAR Mill.
5. High luminous light fittings have been introduced An average of 9500 Kwh saving per monthin SMS and Switch yard. Replaced 65 Nos of 400watt sodium vapor lamps with 18 numbers of metalhalides lamps.
6. Optimizing oil consumption in the newly commissioned Oil consumption improved from 52 to 40walking beam furnace in rolling mill. Ltrs/ton.
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FORM A
(Form for disclosure of particulars with respect to conservation of energy)
Current Year 2007-2008 Previous Year 2006-2007
Steel Stampings Total Steel Stampings Total
A) Power & Fuel Consumption
1 Electricity
a Purchased
Units (KWH) 165,908,137 11,886,090 177,794,227 149,534,289 6,459,915 155,994,204
Total Amount (Rs.) 800,014,313 54,515,500 854,529,813 679,822,264 33,060,861 712,883,125
Rate/Unit (Rs.) 4.82 4.59 4.81 4.55 5.12 4.57
b Own Generation (KWH) 60,112 1,097,825 1,157,937 56,296 263,688 319,984
2 Coal N.A N.A N.A N.A N.A. N.A
3 Furnace Oil
(K.Litres) 19,883 N.A 19,883 18,094 N.A 18,094
Total Amount (Rs.) 354,246,024 N.A 354,246,024 285,919,196 N.A 285,919,196
Rate/Unit (Rs.) 17,817 N.A 17,817 15,802 N.A 15,802
4 OTHER FUEL OIL (L.D.O.)
Quantity (K.Litres) 177 N.A 177 10 N.A 10
Total Amount (Rs.) 4,802,593 N.A 4,802,593 291,814 N.A 291,814
Rate/Unit (Rs.) 27,173 N.A 27,173 29,181 N.A 29,181
B) Consumption Per Unit of Production
1) Products *Unit - MT 131,452 33,177 164,629 121,318 29,397 150,715
2) Electricity (KWH/MT) 1,262 391 1,080 1,233 229 1,035
Total for the Plant
3) Furnace Oil (K.Litres/MT) 0.151 N.A 0.121 0.149 N.A 0.120
Total for the Plant
4) Coal N.A N.A N.A N.A N.A. N.A
5) Other Fuel Oil (K.Litres/MT) 0.00134 N.A 0.00107 0.00008 N.A 0.00007
Total for the Plant
6) Total Fuel Oil
(Furnace Oil+L.D.O.)
(K.Litres/MT) 0.153 N.A 0.122 0.149 N.A 0.120
* Indicates in house production only.
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FORM B
(Form of disclosure of particulars with respect to Technology Absorption)
RESEARCH & DEVELOPMENT
Specific areas in which R&D activities have been successfully completed during the year 2007 – 08:-
Sr. No. Product & process improvement Benefits
1. 15 new grades have been developed. Introduction of new grades makes widerproduct range and customer base.
2. Close control of mechanical properties has been Improved product quality and better customermade possible for many grades through modified satisfaction.HT cycles.
3. Modified BP flux has been developed which Product quality improvement.improved the surface quality of ingots.
4. Internal rejection has been reduced through Reduction of internal rejection.improvement of teeming process.
5. Carbon variation in some grades has been Improvement of product quality and bettereliminated; thereby further consistency in chemistry customer satisfaction.has been achieved.
6. Inclusion rating in 20MC5 has been consistently Improvement of product quality and bettermaintained much below the customer’s customer satisfaction.requirement. This has been made possible byprocess improvement.
7. A new effective Argon shroud system for teeming Improvement of product and process.has been developed.
Future Plan of action:-
• Further improvement in quality such as inclusion level, gases, microstructure, mechanical properties of HTproducts etc.
• Improvement of surface quality of the products.
• To develop new grades with stringent quality requirement for export.
• Improvement of banding in some specific grades.
A full fledged new department for the research and development has been constituted. This will enable theCompany to aim at new product developments and applications in a structured manner.
Expenditure on R&D:
2007 – 08 2006 – 07(Rs. in Lacs) (Rs. in Lacs)
a) Capital - 20.24
b) Recurring 96.53 63.77
c) Total 96.53 84.01
d) Total R&D expenditure as percentage of total turnover 0.104 0.117
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TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
(Efforts in brief towards technology absorption, adaptation and innovation and benefits derived as a result of theabove efforts.)
Sr. No. Technology Benefits
1. A new Electric 40 MVA EBT Arc Furnace with latest Digital Productivity improvement andcontrolled and operating with new generation hydraulic operated prevention of primary slag carryover.fast response proportional valves was commissioned earlier.But in 2007 - 08 the furnace is fully operational and operationalpractices have been established and stabilized.
2. Latest technology high efficiency dust & fume extraction system Improvement in environment.commissioned earlier has since been stabilized in FY 2007-08.
During the last five years there has not been any Import of Technology.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The information of foreign exchange earnings and outgo is furnished in the notes to the accounts.
For and on behalf of the Board
Keshub MahindraChairman
Mumbai: 29th April, 2008.
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MANAGEMENT DISCUSSION AND ANALYSIS (MDA)
Overview
Mahindra Ugine Steel Company Limited (MUSCO) hastwo business segments, one for the Manufacture ofAlloy Steel at its plant at Khopoli (Maharashtra), andthe other for Stampings business at its units at Kanhe,Nashik (both in Maharashtra) and Rudrapur(Uttarakhand). Mahindra & Mahindra Ltd. (M&M), throughits subsidiary, holds 50.69% in the share holding ofthe Company.
Industry Structure and Development
Steel business
At the steel division, your Company manufactures AlloySteel through the Electric Arc Furnace (EAF) route. Itsproducts include alloy, tool and die steel, ball bearingsteels, engineering alloy & construction steels andsteels used in off shore oil fields. The steel division atKhopoli is TS16949 certified by RWUTV of Germany.
MUSCO has been the leading player in the Alloy Steelindustry in the country for the last four decades. Withthe emergence of India, both as a consuming marketas well as a production base for Original EquipmentManufacturers, there has been a strong and sustainedgrowth in MUSCO’s markets of interest i.e., Auto,Bearings, Industrial Equipment, Railways and Defence-to name a few. With projections that vary between10% to 15% growth in these markets, MUSCO’spresence as a premium player leaves it well poised togrow rapidly over the next decade.
The relentless focus on Product and Processimprovement has resulted in MUSCO’s entry into aselect group of suppliers to the Indian Railways – acustomer that has been identified as a key account forthe Company and a high growth market. The reputationof being a high quality supplier has been furtherenhanced by the steady stream of Global approvalsthat your Company has been getting from leadingBearing manufacturers: SKF, Timken, FAG and NKKBearings. Other customers include Bharat Forge,Cummins, Sandvik, Siemens, Tata Motors - all leadersin their respective fields and whose demand for yourCompany’s products has been growing consistently.More importantly, MUSCO is now being viewed,globally, as a Partner in growth rather than simply aVendor.
However, there have been other developments for mostof the past year that have caused concern. The global
steel industry has been hit by rising input costs.Flooding of coking coal mines in Queensland,transportation issues for coal in Russia and the shuttingdown of small coking coal mines in China have allresulted in skyrocketing prices of Pig Iron- one of themajor inputs for the Steel Industry. This has beenaggravated by a steep rise in Iron Ore prices- theother prime raw material for Pig Iron manufacture.
Fortunately for MUSCO, there has been some relief.The economics of manufacture of alloy steel throughthe EAF route (is relatively more dependent on Powerrather than Pig Iron) and has therefore meant thatyour Company is a little better protected against PigIron pricing when compared to other Blast Furnacemanufacturers. However, it has over the past few yearsborne the brunt of Power cost increases, with theweighted cost increasing from Rs 3.40/kwh to Rs 5.10/kwh.
Your Company has been constantly striving to mitigatethis cost pressure and to this end, MUSCO has nowsigned an agreement with Wardha Power CompanyPrivate Limited (WPCPL), a company promoted as aSpecial Purpose Vehicle (SPV) of KSK Power VenturesLimited. Your Company has agreed to an equityinvestment of Rs.22.75 crore in the SPV, thus entitlingit to 35 MW of power. The project is expected to beready in phases from July 2009 onwards and our InputFeed, as per agreement, is expected to begin fromJanuary 2010 onwards.
In order to optimize productivity, your Company is inthe midst of various capital expenditure projects. TheEccentric Bottom Tapping (EBT) furnace wascommissioned last year and has aided in producing3409 heats in F.Y.2007-08, an increase of 306 heatsover F.Y.2006-07. This project, along with the projectfor installation of the Walking Beam furnace, is nowbeing evaluated for Carbon Credits. In F.Y.2007-08,the major ongoing project has been the installation ofthe Continuous Mill which will enable MUSCO tooptimally utilize its current melting capacity, streamlinethe rolling process and add to the menu of sizes onoffer. Commissioning is expected to be complete byOctober, 2008.
Downstream integration and entry into Products is anessential part of the Your Company’s strategy to deriskagainst market cyclicality and to get closer to the endcustomer. The execution of this strategy has beeninitiated by acquiring a battery of presses and ring
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rolling mills to produce Bearing Races. This willstrengthen your Company’s position in the key Bearingsmarket and consolidate its position as a partner ingrowth with MNC’s like Timken, SKF etc.The BearingRaces project is now under installation, the recentagitation against migrant workers has delayedproceedings, but it is expected that the plant will befully commissioned by October, 2008.
The two pronged strategy on improving the CostStructure (through Productivity related measures aswell as Cost Reduction exercises) and Downstreamintegration into Products and Specialized Steel requiresthe relentless focus of a strong management team.Your Company has strengthened the team over thepast year and has been selectively hiring keyexecutives to fill critical gaps and the completion ofthis exercise has positioned MUSCO into a companythat now has the drivers necessary to execute itsstrategy for future growth.
Stampings Business
The Stamping business depends largely on the growthof Automotive and Farm equipment markets and boththese sectors have registered healthy growth over thelast decade. For the financial year F.Y.2007-08,however, both markets have registered an overallslowdown.
Passenger vehicles, LCV’s markets have registered agrowth of 11.8% & 10% respectively; however HCV’s,Three Wheelers & Two Wheelers have registered anegative growth of 0.4%, 7.2% & 5% respectively overF.Y.2006-07. Overall Automotive sector had a negativegrowth of 2.2% for F.Y.2007-08 over F.Y.2006-07. FarmEquipment sector has had a negative growth of 4%for F.Y.2007-08.
Spiraling increase in steel prices in F.Y.2007-08 Q4 &April ‘08 has hit most Indian manufacturers. Further,the interest rate hike, liquidity crunch, high oil prices &other inflationary factors have hit the overall economyand the Automotive & Farm Equipment sectors werealso affected, in varying degrees. Alleviating measureslike the Farm loan waiver are expected to have acascading effect (on the Farm Equipment sector)- if atall- only after the first half of F.Y.2008-09.
Competition in the Stampings business is between sixto seven large players and several medium sized andsmall scale operators. The big players are verticallyintegrated, the medium and small scale players remainprimarily as conversion agents. It is imperative for the
big players to create a Unique Selling Proposition oftheir own in order to survive. This USP can be createdthrough the capability of tool design, new technology(hot stamping, tailor welded blanks) and customercentricity through quality, cost and delivery.
MUSCO Stampings has drawn strategic plans to createa niche for itself and attain better value additions.MUSCO Rudrapur has been commissioned as a state-of-the-art plant that is equipped with Cathodic ElectrodeDeposition (CED) coating and top coat plant alongwith assembly & press shop. MUSCO Rudrapur willmanufacture painted assemblies for Farm equipmentsector. It is also gearing up to supply assemblies toTML & Ashok Leyland at Pantnagar. Similarly Nasik &Kanhe plants are improving their product mix in favourof assemblies to customers like M&M, MahindraRenault & Tata Motors.
The Company is also in the process of upgrading andexpanding the existing Tool Room. This will help us tobecome Full Service Suppliers providing “Design toDelivery”. The Tool design office has been expandedin F2008 and has commenced design & manufacturingof tools thereby strengthening and adding value to theservices on offer to the customer.
Capacity utilization at Nashik Plant has been 100% forlast two years even after expansion in last year.Although Rudrapur facility has not been able to utilizefull capacity because of downturn in FES, risk mitigationis being down by adding other customers such as TataMotors and Ashok Leyland - whose plants have comeup in the region and for whom our plant will strive tobecome a preferred supplier.
Opportunities, threats and risks
Steel Business
The demand for steel is expected to grow significantlyespecially with growth in the focus markets of Auto,Bearings, Railways, Engineering and Defence. Thedownstream growth opportunities in stainless steel,open die forging, wire rods and high value ESR steelsare also being evaluated.
The business faces an unprecedented increase in thecost of power and also steep increase in the cost ofmetallics and Ferro alloys. After having taken steps toenhance the capacity and balancing, the Companyhas now decided to address the issues relating tometallics and power. As mentioned earlier, yourCompany has already taken effective steps to reducedependence on MSEB power by signing a powerdelivery agreement with WPCPL. The issue of metallicscost control is now being analysed and planned for.
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Stampings Business
Investment by global OEMs like Volkswagen at Chakan& General Motors at Talegaon offer additional businessopportunities for Stampings at Kanhe. Setting up ofoperations in Uttrakhand by Tata Motors, AshokLeyland & expansion by M&M Auto Sector at Haridwaroffers excellent business opportunities for our RudrapurPlant. Our Nashik Plant continues to grow on accountof growth in M&M and Mahindra-Renault.
To derisk from the Auto industry, your Company aimsto enter non-Auto businesses like the white goodssector & general engineering industries. Automationdrive at Kanhe plant has been undertaken to enhanceproductivity and create additional capacity at low costwhich will help to cater to the increased demand inthis region.
Operations
Steel Business
i) Steel products
The Company’s products continue to be receivedwell in the market. In the face of competitivepressures, there is an ongoing effort to improveour performance with respect to quality andcustomer satisfaction and we have instituted stepsto measure the Satisfaction Index consistent withthe philosophy of Customer Centricity espousedby the Mahindra & Mahindra Group. The productionof tool, alloy and special steel increased from121317 tonnes (F.Y.2006-07) to 126970 (F.Y.2007-08) registering a growth of 4.65%; for the sameperiod the Net Sales increased by 5.11% from121099 tonnes (F.Y.2006-07) to 127290 tonnes(F.Y.2007-08). The overall revenue moved up fromRs.585.56 crores (F.Y.2006-07) to Rs.701.37crores (F.Y.2007-08).
However, due to the increase in the power costsfrom Rs. 3570/MT in F.Y. 2006-07 to Rs. 3879/MTin F.Y. 2007-08 and the cost of metallics movingup from Rs.17147/MT in F.Y. 2006-07 to Rs.19530/MT in 2007-08, the margins came under pressureas all costs could not be passed on to thecustomer. The Company is therefore taking stepsto address the metallics issues. As mentionedearlier, your Company has already signed anagreement with WPCPL for securing power at acheaper cost.
Your Company introduced the 5"S” (Seiri ortidiness, Seiton or orderliness, Seiso or systemized
cleanliness, Seiketsu or standards and Shitsukeor sustaining discipline) initiative for the steelbusiness during the year which will start yieldingresults going forward.
ii) Bearing races
Immediately on purchasing the Bearing Racesbusiness of Tata Steel Limited, MUSCOcommenced operations on the assets atJamshedpur. The idea was to enable the Companyto get acquainted with the new assets and imparttraining to the new set of workers and employeeson the equipment. The Company produced 3741tonnes of rings till September 2007 at Jamshedpurand sold 4112 tonnes of rings till March 2008. Thesales turnover for the period April-07 to March -08was Rs. 33.17 crores with a loss of aboutRs.6 crores. This loss was due to lower productivityand higher costs attributable to the training processand impediments in working with manpower (thatwas to be retrenched imminently) at high fixedrates at Jamshedpur. The operations atJamshedpur have since been stopped inSeptember ’07 and the assets are beingtransplanted at Khopoli; this installation exerciseis expected to be complete by October ’08.
The Bearing races business is identified as a KeyBusiness Area for the Company; all customers ofthe erstwhile TISCO business have been migratedto MUSCO and have been very supportive of thegrowth of the new business at MUSCO. MUSCOwill now be the only integrated producer of BearingRaces in the country. Adding on Machining andHeat treatment of rings, so as to be able to give acomplete solution to the customer, is part of thebusiness plan.
Stampings Business
Sale of Stampings & assemblies has increased from29,452 MT (F.Y. 2006-07) to 36,053 MT (F.Y. 2007-08) and revenue from Rs. 86.08 crores (F.Y. 2006-07)to Rs. 135.72 crores (F.Y. 2007-08).
Various initiatives have been launched forimplementation of world class quality systems at allplants. MUSCO Nashik has achieved Grade B forASES which is a quality system of Renault. This is ahigh rating since only 30% of the suppliers havequalified for B rating. Quality Circles & 5S programshave been instituted at all plants.
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Financial Performance
Continuing with details provided above, summary offinancial performance is presented below:
Summary of Financial Performance
Amount in (Rs.) crore
Particulars Steel Stamping Total(including
bearing races)
April- April- April- April- April- April-Mar 08 Mar 07* Mar 08 Mar 07 Mar 08 Mar 07
Sales 746.66 597.57 175.52 119.66 922.18 717.23
Other Income 1.54 0.83 1.22 0.85 2.76 1.68
Total Income 748.20 598.40 176.74 120.51 924.94 718.91
Expenses 720.13 565.02 160.62 85.72 880.75 650.74
EBIDTA 65.49 50.54 34.04 46.19 99.53 96.73
PBT 28.07 33.38 16.12 34.79 44.19 68.17
PAT 29.49 44.90
* excludes bearing races.
Material Development in Human Resources/
Industrial Relations
As at 31st March 08 the Company had 779 employeesin Steel and 757 in Stamping business. RegularTraining Programs in various areas of operations atdifferent levels in the organization are conducted; wealso have programs to effectively collect employeefeedback and improve overall engagement. YourCompany introduced a process of hearing the voicesof the employees through a structured program titled“Bindaas Bol” (Talk Candidly) which aims at listeningto the suggestions of the employees as part ofimprovement in the working of the organization.
Internal control systems and their adequacy:
The Company at all its locations has well establishedinternal audit and internal control systemscommensurate with the size of its operations with aview to ensure that all the assets are safeguarded andprotected against losses and that all the transactionsare appropriately authorized, correctly recorded anddisclosed in the financial statements. Based on theseduly authorized documentations, the financialstatements are prepared. The internal audit of thecompany is carried out by a reputed and experiencedfirm of Chartered Accountants. They periodicallyevaluate the internal controls which provide reasonableassurance regarding the effectiveness and the
efficiency of operations. Independence of the Auditand compliance function is ensured by the directreporting of the Internal Audits to the Audit Committeeof the Board. Details on the composition and functionsof the Audit Committee can be found in the chapter onCorporate Governance.
Outlook
The expansion activities in the steel business has beendelayed partly due to the extended time for thefoundation and the refurbishing of the continuous mill;this has been aggravated by the recent incidents ofviolence against migrant workers in Maharashtra. Onaccount of this, both the continuous mill and the bearingraces projects have been slowed down andcommissioning has been delayed to October 2008.The state of the art Rudrapur unit for making thepressed metal components commenced operationsfrom May 2007 and is yet to stabilise operations onaccount of low volumes from the tractor business ofM&M at Rudrapur. The Rudrapur division has presentlytaken up press metal operation for the three wheeler“Alfa” of the Auto Division of M&M; it is expected thatthe volume will progressively increase and providesignificant improvement in the capacity utilisation ofthis division.
The Company is conscious of its status as a customercentric corporation in line with the Group Philosophy.Our endeavor to retain such status continues to beonly through relentless service.
Cautionary Statement
Certain statements in the Management Discussion &
Analysis describing the Company’s objectives,
projections, estimates, expectations or predictions may
be “forward looking statements” within the meaning of
applicable securities laws and regulations. Actual
results could differ from those express or implied.
Important factors that could make a difference to the
Company’s operations include raw material availability
and prices, cyclical demand and pricing in the
Company’s principal markets, changes in Government
regulations, tax regimes, economic developments within
India and the countries in which the Company conducts
business and other incidental factors.
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CORPORATE GOVERNANCE REPORT
Company’s philosophy on code of Corporate
Governance
Your Company follows good corporate governancepractices and ensures transparency in its policies,reporting, and decision making process. The Companyemphasizes on effective and efficient accountingsystem, internal control mechanism and planningprocess. The practices adopted by the Company layemphasis on optimum utilization of the resources sothat the Company grows from strength to strength andcreates wealth for its stakeholders.
The Board of Directors of the Company has anappropriate composition of Executive and Non-Executive Directors including Independent Directors.The Board of Directors through the active participationof Directors ensure that the discussions and decisionson the policy matters are taken after due deliberationand discussion and in consonance with the goodCorporate Governance practices.
A report on compliance with the Code of CorporateGovernance as prescribed by the Securities andExchange Board of India and incorporated in the ListingAgreement is given below.
I. BOARD OF DIRECTORS – Constitution and
Composition
The Chairman of the Company is a Non –Executive Director and the number of IndependentDirectors is more than 1/3rd of the total strengthof the Board. The number of Non-ExecutiveDirectors is more than 50% of the total strength ofthe Board. The composition of the Board is inconformity with Clause 49 of the Listing Agreement.
The management of the Company is entrusted inthe hands of the Key Management Personnel ofthe Company and is headed by the ManagingDirector and Executive Director who function underthe supervision and control of the Board. The Boardreviews and approves strategy and oversees theactions and results of management to ensure thatthe long term objectives of enhancing stakeholdervalue are met.
The Chairman and the Vice-Chairman of theCompany, though professional Directors in their
own individual capacity, belong to the promotergroup of the ultimate holding company Mahindra& Mahindra Limited (M&M). Mr. Hemant Luthraand Mr. Rajeev Dubey, Non-Executive Directorsof the Company, are in the whole time employmentof M&M, and draw remuneration from it. Mr. R. R.Krishnan, a Non–Executive Director of theCompany is a consultant with M&M and drawsconsultancy/advisory fees from it.
Apart from the above and apart from there-imbursement of expenses incurred in thedischarge of their duties and the remuneration thatthese Directors would be entitled to under theCompanies Act, 1956 as Non-Executive Directorsand the remuneration that some of the Directorsmay receive for professional services as an advisor,none of these Directors has any other materialpecuniary relationship or transaction with theCompany, its Promoters, its Directors, its SeniorManagement and associates which, in theirjudgement, would affect their independence.
The Senior Management have made disclosuresto the Board confirming that there are no material,financial and/or commercial transactions betweenthem and the Company which could have potentialconflict of interest with the Company at large.
A. Composition of Board
The Company presently has eleven Directors,including one Managing Director and one ExecutiveDirector. There are five Non-Independent Non-Executive Directors. The remaining four Non-Executive Directors (including the NomineeDirector) are Independent Directors andprofessionals, with expertise and experience ingeneral corporate management, finance, bankingand other allied fields.
The names and categories of Directors, the numberof Directorships and Committee positions held bythem in the Companies are given below. None ofthe Directors on the Board is a Member of morethan 10 Committees and Chairman of more than 5Committees (as specified in Clause 49 of theListing Agreement), across all the companies inwhich he is a Director.
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The Constitution of the Board as on 31st March, 2008 is as under:
Directors Category Total number of Total number of Directorships* of
Committee Chairmanships Public Companies
Memberships+ of Committees+ as on 31st March,
of Public of Public 2008.
Companies as Companies as
on 31st March, on 31st March,
2008. 2008.
Non- Executive
Mr. Keshub Mahindra- Chairman Non Independent 1 1 7
Mr. Anand G. Mahindra- Vice-Chairman Non Independent 1 Nil 13
Mr. Hemant Luthra Non independent 3 Nil 9
Mr.R.R.Krishnan Non Independent 3 1 3
Mr.Rajeev Dubey Non Independent 1 1 8
Dr.H.N.Sethna Independent 8 3 6
Mr.M.R.Ramachandran Independent 2 2 1
Mr.K.B.Saha(nominee of LIC) Independent 1 Nil 1
Mr.S.Ravi Independent 8 4 12
Executive
Mr.K.V.Ramarathnam- Managing Director Non Independent 1 Nil 2
Mr. Deepak Dheer– Executive Director Non Independent Nil Nil 1
* Excludes Directorships in Private Companies, Foreign Companies, Companies registered under Section 25of the Companies Act 1956 and Government Bodies but includes Directorships in Mahindra Ugine SteelCompany Limited.
+ Committees considered are Audit Committee and Shareholders/Investors’ Grievance Committee, includingin Mahindra Ugine Steel Company Limited.
B. Board Procedure
A detailed Agenda folder is sent to each Director inadvance of Board and Committee Meetings. To enablethe Board to discharge its responsibilities effectively,the Managing Director briefs the Board at everyMeeting on the overall performance of the Company,followed by presentations by the other Senior
Executives of the Company. A detailed functional reportis also placed at Board Meetings. The Board also inter
alia reviews strategy and business plans, annualoperating and capital expenditure budgets, investmentand exposure limits, compliance reports of all lawsapplicable to the Company, as well as steps taken bythe Company to rectify instances of non-compliances,review of major legal issues, adoption of quarterly/
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half-yearly/annual results, significant labour issues,transactions pertaining to purchase/disposal ofproperty, major accounting provisions and write-offs,corporate restructuring, Minutes of Meetings of theAudit and other Committees of the Board, informationon recruitment of Officers just below the Board level,including the Compliance Officer.
C. Number of Board Meetings, attendance record
of the Directors at Meetings of the Board and
at the last Annual General Meeting.
Five Meetings of Board of Directors were held duringthe year 1st April, 2007 to 31st March, 2008 on thefollowing dates:
- 27th April, 2007 - 28th January, 2008
- 26th July, 2007 - 25th March, 2008
- 24th October, 2007
The gap between two Meetings did not exceed fourmonths. These were well attended by directors.
The Forty - fourth Annual General Meeting (AGM) washeld on 26th July, 2007.
The attendance of the Directors at these Meetings isas under:
Director Number of AttendanceBoard at the
Meetings last AGMAttended
Mr.Keshub Mahindra 5 Yes
Mr.Anand G.Mahindra 5 Yes
Mr.K.V.Ramarathnam 5 Yes
Mr.Deepak Dheer 5 Yes
Mr.N.V.Khote* 1 No
Dr.H.N.Sethna 4 Yes
Mr.M.R.Ramachandran 4 Yes
Mr. Hemant Luthra 5 Yes
Mr.R.R.Krishnan 5 Yes
Mr.Rajeev Dubey 5 Yes
Mr.K.B.Saha 4 No
Mr.S.Ravi 2 No
* Expired on 9th September, 2007.
D. Directors seeking appointment / re-appointment
Mr. K.V. Ramarathnam, Managing Director is seekingre-appointment as the Managing Director w.e.f 5th May
2008 for a period of 3 years. Further, Mr. HemantLuthra , Mr. R.R. Krishnan and Mr. S. Ravi, retire byrotation and being eligible have offered themselves forre-appointment.
Mr. K.V. Ramarathnam
Mr. K. V. Ramarathnam is a Graduate in MechanicalEngineering from University of Madras and has richexperience of 37 years in Steel and related industries.
Mr. K.V. Ramarathnam was SBU Head (Steel Division)of Perkasa Indobaja, Subang, Indonesia, (TexmacoGroup) for more than 5 years heading Seamless Tubes,Hot Rolling Mill, Steel Melting Shop. Mr. K. V.Ramarathnam was also associated as a Key Personnelfor more than 17 years with Kalyani Steels Ltd. andKalyani Seamless Tubes Ltd.
Mr. K.V. Ramarathnam has handled all areas ofoperations including Installation & Commissioning fromgreen field site to full capacity, Production, Marketing,Process and equipment selection, Project appraisaland implementation, Cost Control, Recruitment &Training, Review of all MIS & action plans, Funds Flowmanagement etc. Mr. K. V. Ramarathnam has widelytraveled on different assignments and is an effectiveteam leader.
Mr. K.V. Ramarathnam is holding Directorship ofMarmagoa Steel Ltd, and is a member of Shareholders’Grievance Committee of Mahindra Ugine Steel Co.Ltd. Mr. K. V. Ramarathnam is not holding any sharesof the Company.
Mr. Hemant Luthra
Mr.Hemant Luthra is a graduate of the Indian Instituteof Technology, Delhi where he was nominated for thePresident’s Gold Medal for best all round student. Hehas also been through the Advanced ManagementProgramme at the Harvard Business School. Mr.Luthrajoined Mahindra & Mahindra Limited (M&M) asExecutive Vice President – Corporate Strategy inDecember 2001 and was involved in a number ofStrategic initiatives across different sectors and groupcompanies. He serves on several Boards and is alsoChairman of some Mahindra Group companies.
Mr. Luthra is a member of the Group ManagementBoard of M&M and is President of Mahindra Systems& Automotive Technologies (Systech) Sector.
Mr. Luthra has 35 years of varied and rich workexperience in Operations, Finance, BusinessDevelopment and Private Equity, which is of special
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interest to M&M today as it seeks to consolidate itsleadership in different verticals on the back of its strongfinancial performance. Mr. Luthra started his careerwith IBM in India where he was directly responsiblefor a substantial part of the business with responsibilityfor both Large Accounts and the Finance Industryvertical. He was seconded to IBM Singapore asMarketing Advisor and was the recipient of severalawards including one from the Chairman for his specialcontribution to teamwork.
After IBM, Mr. Luthra spent 18 years with the ThaparGroup, a $1 Billion conglomerate with interest in Paper,Chemicals & Engineering. As Group CFO and then asCOO of the Group’s flagship company BILT, he servedon the Board of several joint ventures of the Group[with Dupont, Mitsubishi, OKI and served as Chairmanof the JV with Maersk Shipping].
Following his entrepreneurial instinct Mr. Luthra thenfounded a Private Equity fund for the ING Group andserved as its first CEO. He later joined the Essar Groupas CEO of their Telecom business and helped engineera lucrative merger of the business with Hutchison. Hethen worked with Enron India as CEO of their BroadBand business.
Mr. Luthra is the Chairman of Mahindra EngineeringDesign & Development Company Limited. MahindraComposites Limited, Mahindra Hinoday IndustriesLimited. Mahindra Castings Private Limited, MahindraAerospace Private Limited and Mahindra SARTransmission Private Limited. He also holdsDirectorships in public Companies of First ChoiceWheels Limited, Mahindra Sona Limited, MahindraLifespaces Developers Limited, Mahindra ForgingsLimited, Mahindra International Limited. He is a memberof the following Board Committees;
Sr. Name of the Name of the Position
No. Company Committee held
1. First Choice Wheels Audit Committee Member
Limited
2. Mahindra Lifespace Shareholders/Investors’ Member
Developers Ltd. Grievance Committee
3. Mahindra Ugine Steel Investors’ Grievance Member
Co. Ltd. Committee
Mr. Hemant Luthra is holding 5906 shares of the Company.
Mr. R.R. Krishnan
Mr.R.R.Krishnan is an Honours graduate inMathematics from University of Delhi and has alsodone his GPMD course from Michigan BusinessSchool. Mr. R. R. Krishnan was with Mahindra Groupfor around 47 years and has held several seniorpositions during his stint with Mahindra Group. He wasMember of the Group Management Board of Mahindra& Mahindra Ltd., until March 2005 and was also theManaging Director of Mahindra Intertrade Ltd. andMahindra Steel Service Center Ltd. (MSSCL).Mr. R. R. Krishnan was responsible for the activities ofthe then Intertrade Division of Mahindra and MahindraLimited (M&M), which subsequently became ‘MahindraIntertrade Ltd.’ (MIL). During his tenure he wasresponsible for setting up the facilities of MSSCL andthe expansion thereof. MIL also expanded globally toset up a facility in UAE – Mahindra Middleeast ElectricalSteel Service Centre -FZC. Mr. R.R. Krishnan, carrieswith himself rich experience and expert knowledge ofsteel industry.Mr. R.R. Krishnan holds Directorships of MahindraComposites Ltd. and Mahindra Forgings Ltd. He is amember of the following Board Committees;
Sr. Name of the Name of the Position
No. Company Committee held
1 Mahindra Ugine Steel
Co. Ltd. Audit Committee Member
Investors’ Grievance
Committee Chairman2. Mahindra Forgings Ltd.
Audit Committee Member
Mr. R. R. Krishnan is presently a senior advisor in M&M.Mr. R. R. Krishnan does not hold shares in the Company.
Mr. S. Ravi
Mr. S. Ravi is a Post Graduate in Commerce and F.C.A.He is a practicing Chartered Accountant and the SeniorPartner of Ravi Rajan & Co. During the course ofpractice, he has handled various assignments in thefield of Restructuring & Rehabilitation of companies,Takeover, Mergers & Acquisitions and Business andBrand valuation. He is also a member on the Board ofVoluntary Health Association of India (VHAI).
His experience in the banking sector includes tenureas Government Nominated Director of UCO Bank,wherein as a member of the Strategic Revival Group,he was instrumental in the formulation of the revivalplan and its subsequent implementation. Mr. S. Raviwas also a member of the strategic Revival Committee
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of Dena Bank apart from Asset Liability ManagementCommittee, Risk Management Committee andCommittee for Monitoring NPAs and Chairman of AuditCommittee during his tenure as shareholder directorof the Bank. Mr. S. Ravi is a visiting faculty at IIMTManagement College, Meerut and National Institute ofBanking Studies and Corporate Management(NIBSTC), Noida. Mr. S. Ravi is an expert analyst onBanks, Economic and Business Matters of CNBC, ZEEand other TV Channels and contributed articlespertaining to banking in leading Financial Dailies.Mr. S. Ravi is an advisor of the Management StudyGroup of Northern Indian Regional Council of ICAI.Mr. S. Ravi is also a guest lecturer at variousManagement Institutes.Mr. S. Ravi holds the Directorships of the followingbody corporates viz. IFCI Limited, Corporation Bank,IDBI Capital Market Services Limited, Batliboi Limited,UTI Trustee Company Private Limited, Gujarat PipavavPort Limited, LIC Housing Finance Limited, IDBI HomeFinance Limited, Kudremukh Iron Ore Co. Ltd.,Hindustan Aeronautics Ltd., Inter-connected StockExchange of India Ltd., Bharat Heavy Electricals Ltd.and Ravi Rajan & Co.Pvt.Ltd. He is a member of thefollowing Board Committees;
Sr. Name of the Name of the PositionNo. Company Committee held
Audit Committee Member
1. Mahindra Ugine SteelCo. Ltd. Investors’ Grievance Member
2. Corporation Bank Audit Committee Member
3. IDBI Capital MarketServices Ltd. Audit Committee Member
4. LIC Housing Finance Audit Committee ChairmanLtd.
5. IDBI Home Finance Ltd. Audit Committee Chairman
6. IFCI Ltd. Audit Committee Chairman
7. IFCI Ltd. Shareholders/ ChairmanInvestors’ Grievance
Committee
Mr. S. Ravi does not hold shares in the Company.
E. Code of Conduct
The Board has laid down two separate Codes ofConduct- one for Board Members and the other forSenior Management and Employees of the Company.These Codes have been posted on the Company’swebsite www.muscoindia.com. All Board Members andSenior Management Personnel have affirmed
compliance with these Codes of Conduct. A declarationsigned by the Managing Director to this effect isenclosed at the end of this report.
F. CEO/CFO Certification.
As required under clause 49 V of the Listing Agreementwith Stock Exchanges, the Managing Director andExecutive Vice President – Finance & MIS havecertified to the Board regarding the financial statementsfor the year ended 31st March, 2008.
II. REMUNERATION TO DIRECTORS
A. Remuneration Policy
While deciding on the remuneration of Directors, theBoard/Remuneration Committee (Committee) considersthe performance of the Company, the current trendsin the industry, the qualification of the appointee(s),their experience, past performance and other relevantfactors. The Board/ Remuneration Committee regularlykeeps track of the market trends in terms ofcompensation levels and practices in relevant industriesthrough participation in structured surveys. Thisinformation is used to review the Company’sremuneration policies.
B. Remuneration to Non-Executive Directors for
the year ended 31st March, 2008.
Non-Executive Directors are paid sitting fee ofRs.7,500/- for every Meeting of the Board and AuditCommittee attended and a sitting fee of Rs.3,750/- ispaid per Meeting in case of Investors’ Grievance andRemuneration Committee Meetings, respectively. Thefees paid to Non-Executive Directors for the year ended31st March, 2008 along with their shareholdings are asunder:
Director Sitting Fees No. of Equityfor Board and shares held asCommittee on 31st March,Meetings 2008Paid duringthe year (Rs.)
Mr. Keshub Mahindra 37,500 1,231
Mr. Anand G. Mahindra 45,000 -
Dr. Homi N. Sethna 71,250 2,200
Mr. N. V. Khote* 18,750 -
Mr. M. R. Ramachandran 82,500 -
Mr. Hemant Luthra 41,250 5,906
Mr. R. R. Krishnan 75,000 -
Mr. Rajeev Dubey 37,500 -
Mr. K. B. Saha** 60,000 -
Mr. S. Ravi 30,000 -
* Expired on 9th September, 2007.** Sitting fees paid to LIC.
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2,15,000 Stock Options have been granted to Non-Executive Directors under the Company’s Stock OptionScheme on 18th August, 2006. The Stock options weregranted at 15% discount to the average of high andlow share prices of the Company on Bombay StockExchange, during 15 days preceding the date of grantof options. Details of these are given in the Statementattached to Annexure I to the Directors’ Report. Apartfrom the above sitting fees, Non–Executive Directorsreceived no remuneration during the year under review.
C. Remuneration to the Managing Director and
Executive Director for the year ended
31st March, 2008.
Remuneration payable to the Managing Director andthe Executive Director is usually fixed by theRemuneration Committee and thereafter approved bythe Board of Directors subject to the approval ofshareholders at a General Meeting.
Following Remuneration paid/payable to the ManagingDirector and Executive Director during the year ended31st March, 2008.
Director Salary Company’s Perquisites Commi- Total Contract No. of(Rs.) contribution and ssion (Rs.) Period Options
to funds* allowances granted(Rs.) (Rs.) in
August,2006
* Mr. K.V.RamarathnamManagingDirector 27,70,851 7,29,000 23,09,367 20,64,000 78,73,218 5th May, 2003 100000
to 4th May,2008.+ +
** Mr. DeepakDheerExecutive Director 34,12,379 4,49,692 12,07,611 19,00,000 69,69,682 20th October, 75000
2006 to 19th
October, 2009.
++ Re-appointed with effect from 5th May, 2008 for aperiod of 3 years by the Board of Directors. Theapproval from the members is being sought for thesame as mentioned in the Notice.
Note:
1. * The Remuneration Committee and the Board ofDirectors at their respective Meetings held on24th October, 2007, revised the remuneration,subject to approval by the members at the ensuingAnnual General Meeting. The options grantedwould vest in four equal installments on the expiryof 12, 24, 36 & 48 months from the date of grantwhich is 18-08-2006 and can be exercised at aprice of Rs. 99/- per share over a period of fiveyears from date of vesting of the options. Mr. K VRamaratham has not exercised any of the vestedoptions during the year.
2. **Remuneration payable to Mr. Deepak Dheer,Executive Director, revised by the RemunerationCommittee at its Meeting held on 24th October,2007 was approved by the Board of Directors atits Meeting held 24th October, 2007. The optionsgranted would vest in four equal installments onthe expiry of 12, 24, 36 & 48 months from the dateof grant which is 18-08-2006 and can be exercisedat a price of Rs. 99/- per share over a period offive years from date of vesting of the options. Mr.Deepak Dheer has not exercised any of the vestedoptions.
3. Notice period applicable to Managing Director andthe Executive Director is three months.
4. The overall remuneration to the Managing Directorand the Executive Director is approved by theRemuneration Committee and the Board ofDirectors.
5. Commission is the only component of remunerationthat is performance linked. All other componentsare fixed.
6. Mr. K. V. Ramarathnam, Managing Director andMr. Deepak Dheer, Executive Director, do not holdany shares in the Company.
III. RISK MANAGEMENT
Your Company has a well-defined risk managementframework in place. The risk management frameworkadopted by the Company is discussed in theManagement Discussion and Analysis chapter of thisAnnual Report. Your Company has establishedprocedures to periodically place before the Board therisk assessment and minimization procedures beingfollowed by the Company and steps taken by it tomitigate these risks.
IV. COMMITTEES OF THE BOARD OF DIRECTORS
A. Audit Committee
The Audit Committee has been constituted by theBoard of Directors and presently it comprises ofDr. Homi N. Sethna, Mr. M. R. Ramachandran,Mr. R. R. Krishnan, Mr. S. Ravi and Mr. K.B.Saha allbeing Independent and Non-Executive Directors exceptMr. R. R. Krishnan, who is a Non-Independent Director.All the Members have vast experience and knowledgeof corporate affairs & financial management andMr. M.R. Ramachandran, Chairman of the Committee,possesses strong accounting and financialmanagement expertise. The Company Secretary actsas Secretary to the committee.
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Mr. M.R. Ramachandran was present at the AnnualGeneral Meeting of the Company held on 26th July, 2007.
The terms of reference of this Committee are verywide. Besides having access to all the requiredinformation from within the Company, the Committeecan obtain external professional advice wheneverrequired. The Committee acts as a link between theStatutory and the Internal Auditors and the Board ofDirectors of the Company. It is authorised to selectand establish accounting policies, review reports ofthe Statutory and the Internal Auditors and meet withthem to discuss their findings, suggestions and otherrelated matters. The Committee is empowered inter
alia to review the remuneration payable to the StatutoryAuditors and to recommend a change in Auditors, iffelt necessary. It is also empowered to review FinancialStatements, Management Discussion & Analysis,Material individual transactions with related parties notin normal course of business or which are not on anarm’s length basis. All items listed in Clause 49 II D ofthe Listing Agreement are covered in the terms ofreference. The Audit Committee has been grantedpowers as prescribed under Clause 49 II C.
The Committee held 5 Meetings during the year 2007-08. The gap between two Meetings did not exceedfour months. The attendance at the Meetings was asunder :
Sr. Members Meetings Remarks
No. Attended
1 Mr. M. R. Ramachandran(Chairman) 4 —
2 Mr. N. V. Khote 1 Expired on9th September, 2007
3 Dr. H. N. Sethna 5 —
4 Mr. R. R. Krishnan 5 —
5 Mr. S. Ravi 1 —
6 Mr. K. B. Saha 4 —
The Meetings of the Audit Committee were also attendedby the Managing Director, Executive Director, ExecutiveVice-President (Finance) & MIS, Company Secretary,the Statutory Auditors and the Internal Auditors.
B. Investors’ Grievance Committee
The Investors’ Grievance Committee has beenconstituted by the Board of Directors and theCommittee functions under the Chairmanship ofMr. M. R. Ramachandran, a Non-Executive
Director. Mr. S. Ravi, Mr. Hemant Luthra andMr. K.V.Ramarathnam are also on the Committee.
The Company Secretary is the Compliance Officer ofthe Company.
The Committee meets as and when required, to dealwith matters relating to transfers/transmissions ofshares, issue of duplicate share certificates etc., andmonitors redressal of complaints from shareholdersrelating to transfers, non-receipt of balance-sheet, non-receipt of dividends declared etc.
The Committee held 6 Meetings during the year 2007-08. The attendance at these Meetings was as under:
Sr. Members Meetings
No. Attended
1. Mr. S. Ravi 2
2. Mr. M. R. Ramachandran 5
3. Mr. K. V. Ramarathnam 6
4. Mr. Hemant Luthra* 1
* Appointed w.e.f. 24th October, 2007.
The Company also has constituted a Sub-committeeto expedite the process of Share Transfer/Transmissionconsisting of the following Members:
Mr. K. V. Ramarathnam — Managing Director
Mr. R. Sundaresan — Executive Vice President
(Finance) & MIS
Mr. Ajay Kadhao — Company Secretary
Normally Share Transfer Committee Meetings are heldonce in 15 days to approve share transfers and otherrelated matters and are attended by the ManagingDirector, Executive Vice President (Finance) & MISand Company Secretary of the Company. ShareTransfer Committee Meetings are chaired by theManaging Director of the Company.
During the year, 90 letters / complaints were receivedfrom the shareholders, all of which were attended to /resolved to date.
As on 31st March, 2008, there were no pending sharetransfers pertaining to the year under review.
C. Remuneration Committee.
The role of the Remuneration Committee is to reviewmarket practices and to decide on remunerationpackages applicable to the Managing Director/Executive Director. During the course of its review,the Committee also decides on the Commission and/
MAHINDRA UGINE STEEL COMPANY LIMITED
30
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or other incentives payable, taking into account theindividual’s performance as well as that of theCompany. The Remuneration Committee is alsoempowered to decide on the matters relating toEmployee Stock Option Scheme of the Company.
The Remuneration Committee comprises of Dr. H. N.Sethna, Mr. Hemant Luthra, Mr. M. R. Ramachandranand Mr. K. B. Saha. The Company Secretary acts asSecretary to the Committee.
Dr. H. N. Sethna is the Chairman of the Committee.
The Committee held 2 Meetings during 2007-08. Theattendance at the Meetings was as under:
Sr. Members Meetings Remarks
No. Attended
1. Dr. H. N. Sethna 1 -
2. Mr. Anand G. Mahindra 2 Ceased to be a member
of the Committee w.e.f
24th October, 2007.
3. Mr. Hemant Luthra - Appointed as member of
the Committee w.e.f
24th October, 2007.
4. Mr. M.R. Ramachandran 1 -
5. Mr. K.B. Saha - Appointed as member of
the Committee w.e.f
24th October, 2007.
6. Mr. N.V. Khote 1 Expired on 9th September,
2007
V. DISCLOSURES
A. Disclosures relating to related party
During the financial year 2007-08, there were nomaterially significant transactions entered into betweenthe Company and its promoters, Directors or themanagement, relatives, etc. that may have potentialconflict with the interests of the Company at large.Further, details of related party transactions arepresented in note no. “24” in Schedule “L” to AnnualAccounts of the Annual Report.
B. Disclosure of Accounting Treatment in
Preparation of Financial Statements
The Company has followed the Guidelines ofAccounting Standards laid down by The Institute ofChartered Accountants of India (ICAI) in preparationof its financial statements.
C. Code for Prevention of Insider-Trading
Practices
In compliance with SEBI’s regulation on prohibitionand prevention of insider trading, the Company hasinstituted a comprehensive Code of Conduct forprohibition and prevention of Insider Trading for itsdesignated employees. The Code lays down
Guidelines, which advises them on procedures to befollowed and disclosures to be made, while dealingwith shares of the Company, and cautioning them ofthe consequences of violations.
VI. SHAREHOLDER INFORMATION
(i) Annual General Meeting
The Forty - fifth Annual General Meeting ofthe Company will be held on Thursday,24th July, 2008 at 3.00 p.m. at Amar GianGrover Auditorium, Lala Lajpat Rai Marg, HajiAli, Mumbai-400 034 to transact suchbusiness as stated in the Notice of theMeeting.
(ii) Financial Year of the Company
The financial year covers the period 1st Aprilto 31st March.
Financial Reporting for:
— Quarter ending 30.06.2008 - by end ofJuly, 2008.
— Half-year ending 30.09.2008 - by end ofOctober, 2008.
— Quarter ending 31.12.2008 - by end ofJanuary, 2009.
— Year ending 31.03.2009 - by end of April,2009.
Note : The above dates are indicative.
(iii) Date of Book Closure
Friday, 11th July, 2008 to Thursday, 24th July,2008 (both days inclusive).
(iv) Dividend Payment date
On or after 24th July, 2008.
(v) Listing of Equity Shares on Stock
Exchanges
1. Bombay Stock Exchange Limited.
2. National Stock Exchange of India Limited
3. Calcutta Stock Exchange AssociationLimited*
(*Applied for delisting the equity shares on14th September, 2004 and approval is stillawaited).
The Company has paid the Listing Fees toBombay Stock Exchange Limited andNational Stock Exchange of India Limited.
ANNUAL REPORT 2007-2008
31
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(vi) Stock Codes:
(a) Bombay Stock Exchange Limited(BSE)-504823
(b) National Stock Exchange of India Ltd.(NSE) - MAHINDUGIN EQ
(c) Demat International SecuritiesIdentification Number (ISIN) in NSDL andCDSL for Equity Shares - INE 850A01010
(vii) Stock Market price data:
High/low prices during each month in lastfinancial year on Bombay Stock ExchangeLimited / National Stock Exchange of IndiaLimited.
Month Bombay National Stock Exchange Ltd. Stock Exchange Ltd.
High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)
April 2007 109.00 84.50 109.50 84.00
May 2007 104.80 90.10 105.00 90.00
June 2007 92.45 85.00 92.50 83.30
July 2007 104.85 85.75 104.70 85.10
August 2007 87.00 70.50 87.90 71.00
September 2007 103.50 80.00 103.80 80.30
October 2007 108.00 76.10 100.00 70.00
November 2007 94.90 75.00 94.80 71.00
December 2007 114.85 84.10 115.95 84.00
January 2008 118.70 62.00 118.75 61.80
February 2008 84.90 67.15 82.00 66.80
March 2008 73.70 55.00 74.00 50.00
(viii) Stock Performance in comparison to BSE
Sensitive Index.
ix) Registrar and Transfer Agents-
M/s. Sharepro Services (India) PrivateLimited.
Unit: Mahindra Ugine Steel Co. Ltd.
Satam Estate, 3rd floor, Above Bank ofBaroda, Cardinal Gracious Road, Chakala,Andheri (East), Mumbai- 400 099.
Tel. No. 022-28215168/67720300/67720400
Fax No. 022-28375646/28591568
E-mail : [email protected]
(x) Share Transfer System
All the Transfers received are processed andapproved by the committee constituted forShare Transfer, Transmission etc., purpose,which normally meets at least once in 15days and the committee reports to theInvestors’ Grievance Committee.
(xi) Pattern of shareholding as on 31st March,
2008
Sr. Description Number % to
No. of Shares capital
1 Promoters and PromoterGroup 1,80,37,829 55.53
2 Mutual Funds/UTI 13,59,115 4.18
3 Financial Institutions/Banks 25,944 0.08
4 Insurance Companies 23,07,506 7.10
5 Foreign InstitutionalInvestors 29,76,960 9.16
6 Bodies Corporate 12,55,220 3.87
7 Non Resident Indian /Foreign National 1,54,694 0.48
8 Indian Public (Individuals) 63,64,272 19.60
9 Trusts 989 0.00
TOTAL 3,24,82,529 100.00
0
20
40
60
80
100
120
Mar-08Feb-08Jan-08Dec-07Nov-07Oct-07Sep-07Aug-07Jul-07Jun-07May-07Apr-072000
6000
10000
14000
18000
22000
BSE Sensex PointsMUSCO Price Months
Last trading day of the month
BS
E S
ense
x P
oint
s
MU
SC
O P
rice
Val
ue in
Rs.
MAHINDRA UGINE STEEL COMPANY LIMITED
32
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(xii) Distribution of shareholding as on 31st
March, 2008
Shares No. of % to No. of % toHeld Share Share Shares Shares
holders holders
Up to - 500 22,043 90.77 25,59,199 7.88
501 - 1000 1,206 4.97 9,81,508 3.02
1001 - 2000 545 2.24 8,42,174 2.59
2001 - 3000 163 0.67 4,06,802 1.25
3001 - 4000 81 0.33 2,93,988 0.91
4001 - 5000 69 0.29 3,30,037 1.02
5001 – 10000 92 0.38 7,04,229 2.17
10001-and above 85 0.35 2,63,64,592 81.16
TOTAL 24,284 100.00 3,24,82,529 100.00
(xiii) Dematerialization of Shares and Liquidity
as on 31st March, 2008.
Physical Form : 3.94%Dematerialized Form : 96.06%Trading in equity shares of the Company ispermitted in dematerialized form only as perthe notification issued by Securities andExchange Board of India (SEBI).
(xiv) Outstanding ADRs/GDRs/ Warrants or any
Convertible Instruments, conversion date
and likely impact on Equity.
The Company has not issued any ADRs/GDRs/Warrants or any convertibleinstruments.
(xv) Plant Locations :
1. Steel Division
Jagdish Nagar,Khopoli- 410 216,District-Raigad, Maharashtra.
2. Stampings Divisions:-
a) 371, Takwe Road,At & Post-Kanhe, Tal. Maval,Dist. Pune- 412 106.
b) D-2, MIDC, Ambad, Nashik- 422 010.c) Maharajapur Road, Lalpur, Rudrapur,
(U.S. Nagar), Uttarakhand.(xvi) Address for correspondence
Registered Office:-74, Ganesh Apartment,Opp. Sitaladevi Temple, L. J. Road,Mahim(W), Mumbai-400 016.Tel.: 022-24444287Telefax: 022-24458196E-mail: [email protected]
For all investor related matters, Mr. Ajay Kadhao,Company Secretary & Compliance Officer orMr. Pradeep Salian, Deputy Company Secretarycan be contacted at the above address.Email:[email protected] [email protected]
VII. OTHER DISCLOSURES
1. Annual General Meetings held during thepast three years:
Year Date Time
2004-05 29.07.2005 11.30 a.m.
2005-06 24.07.2006 3.45 p.m.
2006-07 26.07.2007 3.30 p.m.
All the Meetings were held at Amar Gian GroverAuditorium, Lala Lajpatrai Marg, Mahalaxmi,Mumbai - 400 034.
The following Special Resolutions were passed inthe previous three Annual General Meetings:
Financial Date of Special Resolutions passed
Year Meeting
2004-2005 29.07.2005 Approval for revision in
remuneration payable to Mr. K.
V. Ramarathnam as the
Managing Director of the
Company with effect from 1st
April, 2004 for the remainder of
his term of office.
2005-2006 24.07.2006 1. Approval for payment of
Commission to Mr. K.V.
R a m a r a t h n a m - M a n a g i n g
Director for the year 2004-05.
2. Approval for revision in
remuneration payable to Mr. K.
V. Ramarathnam as the
Managing Director of the
Company with effect from 1st
April, 2005 for the remainder of
his term of office.
3. Approval for payment of
Commission to Non- Executive
Directors of the Company.
4. Approval for issue of Shares to
Employees/Directors of the
Company under Employee Stock
Option Scheme (ESOS).
5. Approval for issue of Shares to
Employees of Holding/Subsidiary
Companies of the Company
under Employees Stock Option
Scheme (ESOS).
ANNUAL REPORT 2007-2008
33
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2006-2007 26-07-2007 1. Appointment of Mr. Deepak
Dheer as Executive Director of
the Company for the period of 3
Years from 20-10-2006.
2. Amendment to Articles of
Association of the Company in
respect to increase in Authorised
Share Capital of the Company.
3. To recover from the eligible
employees, the fringe benefit tax
in respect of options which are
granted to or vested or
exercised by, the eligible
employee on or after the 1st day
of April, 2007.
Postal Ballot
The Company has not proposed any special resolution
to be conducted through postal ballot. No resolutions
were passed by the Postal Ballot in the year under
review.
2. Details of non-compliance etc.
The Company has complied with all the
requirements of regulatory authorities. During the
last three years, there were no instances of non-
compliance by the Company and no penalty or
strictures were imposed on the Company by the
Stock Exchanges or SEBI or any statutory
authority, on any matter related to the capital
markets.
3. Means of Communication
The quarterly, half yearly & yearly results are
published in, Business Standard, and Sakal which
are national and local dailies. These are not sent
individually to the Shareholders. The Company
results and official news releases are displayed on
the Company’s website http://www.muscoindia.com.
During the year ended 31st March, 2008, no
presentations were made to institutional investors
or analysts.
4. The Management Discussion and Analysis Report
(MDA) has been attached and forms part of this
Annual Report.
5. Compliance with mandatory & non-mandatory
requirements
The Company has complied with all the mandatory
requirements of Clause 49 of the Listing Agreement
relating to Corporate Governance. Further, the
Company has adopted the following non-mandatory
requirements of the Clause:
• The Company has set up the Remuneration
Committee.
• The financial statements of the Company are
unqualified.
The Company has not adopted the other non-
mandatory requirements as specified in
Annexure ID of the clause 49.
Mumbai: 29th April, 2008.
Financial Date of Special Resolutions passed
Year Meeting
MAHINDRA UGINE STEEL COMPANY LIMITED
34
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DECLARATION BY THE MANAGING DIRECTOR PURSUANT TO CLAUSE 49 OF THE
LISTING AGREEMENT
To
The Members of Mahindra Ugine Steel Company Limited
I, K.V.Ramarathnam, Managing Director of Mahindra Ugine Steel Company Limited, declare that all the members
of the Board of Directors and Senior Management Personnel have affirmed compliance with the Codes of
Conduct for the year ended 31st March, 2008.
K.V. Ramarathnam
Managing Director
Place : Mumbai
Date : 29th April, 2008.
CERTIFICATE
To the Members of Mahindra Ugine Steel Company Limited.
We have examined the compliance of conditions of Corporate Governance by Mahindra Ugine Steel Company
Limited for the year ended 31st March, 2008 as stipulated in Clause 49 of the Listing Agreement of the said
Company with stock exchanges in India.
The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination
was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of
the conditions of Corporate Governance. It is neither an audit nor an expression of opinion of the financial
statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the
Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned
Listing Agreement.
We state that such compliance is neither an assurance as to the future viability of the Company nor the
efficiency or effectiveness with which the management has conducted the affairs of the Company.
For A. F. Ferguson & Co.
Chartered Accountants
B. P. Shroff
Partner
Membership Number: 34382
Place : Mumbai
Date : 29th April, 2008
ANNUAL REPORT 2007-2008
35
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AT A GLANCE
(Rupees in Crores)
Financial Summary 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-2000 1998-99
Sales 922.18 717.23 615.04 522.00 356.57 242.67 256.21 238.93 273.12 238.90
Other Income 2.76 1.68 9.73 1.05 2.47 2.56 0.96 3.68 3.17 3.22
Increase/(Decrease) in stocks 16.13 -4.39 24.92 6.79 -1.45 -5.90 8.34 -5.08 3.97 -3.97
Manufacturing and other expenses 841.54 617.79 526.07 443.46 328.19 233.23 247.06 226.37 265.36 236.88
Depreciation 26.71 16.73 13.08 9.62 9.26 9.61 9.29 9.19 10.35 10.10
Interest 28.63 11.83 11.15 11.38 13.51 13.71 15.40 16.21 20.26 17.90
Profit/(Loss) for the year before tax 44.19 68.17 99.38 65.38 6.63 -17.22 -6.23 -14.23 -15.72 -26.73
Provision for Taxation - Current Tax 10.55 24.82 32.40 5.13 0.53 — -0.57 — — —
- Deferred Tax 4.15 -1.55 -2.13 12.09 — — — — — —
Premium on redemption of Pref.Shares — — 4.04 — — — — — — —
Profit/(Loss) after tax 29.49 44.90 65.06 48.16 6.10 -17.22 -5.67 -14.23 -15.72 -26.73
Equity Dividend 9.74 14.62 14.62* 9.28 — — — — — —
Preference Dividend — 0.22 1.01 1.91 — 1.87 1.07 1.44 — —
Gross Fixed Assets 410.22 317.05 269.63 200.09 200.85 202.11 200.05 194.85 190.74 183.15
Net Fixed Assets 292.40 233.00 115.82 68.61 70.34 81.24 87.26 92.31 99.24 103.96
Investments 0.42 0.52 0.52 3.09 3.11 3.29 3.34 3.34 3.19 3.29
Net Current Assets 229.80 156.93 146.04 95.08 73.17 44.98 52.91 46.50 58.01 67.43
Miscellaneous Expenditure 0.03 0.20 0.59 1.04 1.82 2.31 4.55 7.83 10.78 15.10
Equity Share Capital 32.48 32.48 32.48 30.93 30.93 30.93 30.93 30.93 30.93 30.93
Share Capital 32.48 32.48 37.94 47.39 47.39 47.39 47.39 43.93 43.93 42.43
Reserves and Surplus 155.39 137.30 110.77 43.92 8.78 6.10 71.30 74.82 74.82 78.44
Profit & Loss Balance c/f — — — — — -3.68 -51.66 -45.99 -31.76 -18.54
Net Worth 189.00 170.16 148.12 90.28 54.35 47.5 62.48 64.93 76.21 87.22
Borrowings 316.60 207.42 99.55 64.41 92.26 82.00 81.02 77.22 84.22 87.45
Profit before tax as a % of sales 4.79 9.50 16.16 12.52 1.86 — — — — —
Profit after tax as a % of sales 3.20 6.26 10.58 9.22 1.71 — — — — —
Earnings - Rs. per Equity Share 9.08 13.75 19.68 15.03 1.81 -6.17 -2.18 -5.07 -5.08 -8.64
Dividend - Rs. per Equity Share 3.00 4.50 4.50 3.00 — — — — — —
Book Value - Rs. per Equity Share 58.18 52.39 43.93 23.86 12.26 10.03 14.88 16.79 20.43+ 24.48+
* Including dividend proposed on new equity shares issued under merger of Pranay, Valueline & Console with the Company .
+ After adjusting for Preference Share Capital.
MAHINDRA UGINE STEEL COMPANY LIMITED
36
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AUDITORS’ REPORT
TO THE MEMBERS OF MAHINDRA UGINE STEEL COMPANY LIMITED
1. We have audited the attached balance sheet of
Mahindra Ugine Steel Company Limited, as at 31st
March, 2008 and also the profit and loss account
and the cash flow statement for the year ended on
that date annexed thereto. These financial
statements are the responsibility of the company’s
management. Our responsibility is to express an
opinion on these financial statements based on
our audit.
2. We conducted our audit in accordance with the
auditing standards generally accepted in India.
Those Standards require that we plan and perform
the audit to obtain reasonable assurance about
whether the financial statements are free of
material misstatement. An audit includes
examining, on a test basis, evidence supporting
the amounts and disclosures in the financial
statements. An audit also includes assessing the
accounting principles used and significant
estimates made by management, as well as
evaluating the overall financial statement
presentation. We believe that our audit provides a
reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report)
Order, 2003 issued by the Central Government of
India in terms of sub-section (4A) of Section 227
of the Companies Act, 1956, we enclose in the
Annexure a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred
to in paragraph 3 above, we report that:
(a) we have obtained all the information and
explanations which to the best of our
knowledge and belief were necessary for the
purposes of our audit;
(b) in our opinion, proper books of account as
required by law have been kept by the
company so far as appears from our
examination of those books;
(c) the balance sheet, profit and loss account and
cash flow statement dealt with by this report
are in agreement with the books of account;
(d) in our opinion, the balance sheet, profit and
loss account and cash flow statement dealt
with by this report comply with the accounting
standards referred to in sub-section (3C) of
Section 211 of the Companies Act, 1956;
(e) on the basis of the written representations
received from the directors, as on 31st March,
2008, and taken on record by the Board of
Directors, we report that none of the directors
is disqualified as on 31st March, 2008 from
being appointed as a director in terms of clause
(g) of sub-section (1) of Section 274 of the
Companies Act,1956;
(f) in our opinion and to the best of our information
and according to the explanations given to us,
the said accounts give the information required
by the Companies Act, 1956, in the manner
so required and give a true and fair view in
conformity with the accounting principles
generally accepted in India:
(i) in the case of the balance sheet, of the
state of affairs of the company as at 31st
March, 2008;
(ii) in the case of the profit and loss account,
of the profit for the year ended on that
date; and
(iii) in the case of the cash flow statement, of
the cash flows for the year ended on that
date.
For A.F.Ferguson & Co.
Chartered Accountants
B.P. SHROFF
(Partner)
Membership Number: 34382
Mumbai: 29th April, 2008
ANNUAL REPORT 2007-2008
37
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(Referred to in paragraph 3 thereof)
(i) (a) The company is maintaining proper records
showing full particulars, including quantitative
details and situation of fixed assets. In respect
of furniture, fixtures and office equipment,
location is broadly indicated unit-wise.
(b) As explained to us, the company has a
phased programme designed to verify all fixed
assets over a period of three years.
Accordingly, certain class of assets at
Khopoli, Kanhe and Rudrapur were verified
by the management during the year. No
material discrepancies between the book
records and the physical inventory were
noticed in respect of the assets physically
verified.
(c) During the year, in our opinion, a substantial
part of fixed assets has not been disposed
off by the company.
(ii) (a) The inventory of the company has been
physically verified by the management during
the year and at the year end or after the year
end. The stock of scrap, having regard to its
nature and manner of storage, was verified
at the year end by the management by visual
estimation (relied upon by us). In respect of
materials lying with third parties, these have
been confirmed by them. In our opinion the
frequency of verification is reasonable.
(b) In our opinion and according to the
information and explanations given to us,
having regard to the comment in respect of
scrap in (ii) (a) above, the procedure of
physical verification of stocks are reasonable
and adequate in relation to the size of the
company and the nature of its business.
(c) On the basis of our examination of records
of inventory, in our opinion, the company has
maintained proper records of inventory. As
stock of scrap is verified by visual estimation
(relied upon by us), no adjustments have
been made for the difference between the
stocks so determined and the book records
as it has been explained to us by the
management that such an adjustment would
not be proper having regard to the method of
verification and the quantum of discrepancy
noticed. The discrepancies noticed on
physical verification between the physical
stocks and book records were not material in
relation to the operations of the company.
(iii) (a) The company has not granted or taken any
loans secured or unsecured to / from
companies, firms or other parties covered in
the register maintained under Section 301 of
the Companies Act, 1956, and accordingly
paragraphs (iii)(b), (c), (d), (f) and (g) of the
Order are not applicable.
(iv) In our opinion and according to the information
and explanations given to us, having regard to
the explanations that some of the items are of a
special nature or are at negotiated prices and
therefore alternative quotations are not available,
there are adequate internal control procedures
commensurate with the size of the company and
the nature of its business for the purchase of
inventory, fixed assets and for the sale of goods
and services. Further, on the basis of our
examination, and according to the information and
explanations given to us, we have neither come
across nor have we been informed of any
instance of major weaknesses in the aforesaid
internal control system.
(v) (a) In our opinion and according to the
information and explanations given to us, the
particulars of contracts or arrangements
referred to in Section 301 of the Companies
Act, 1956 have been entered in the register
required to be maintained under that Section.
(b) In our opinion and according to the
information and explanations given to us,
having regard to the comments in (iv) above,
where there have been transactions with other
parties, the transactions made in pursuance
of contracts or arrangements entered in the
register maintained under Section 301 of the
Companies Act, 1956 during the year have
been made at prices, which are reasonable
having regard to the prevailing market prices
for such goods, materials or services at the
relevant time.
ANNEXURE TO THE AUDITORS’ REPORT
TO THE MEMBERS OF MAHINDRA UGINE STEEL COMPANY LIMITED
MAHINDRA UGINE STEEL COMPANY LIMITED
38
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(vi) In our opinion and according to the information
and explanations given to us, the company has
complied with the provisions of Sections 58A,
58AA and other relevant provisions of the
Companies Act, 1956, and the Companies
(Acceptance of Deposits) Rules, 1975 as
applicable, with regard to the deposits accepted
from the public. According to the information and
explanations given to us, no order under the
aforesaid Sections has been passed by the
Company Law Board or National Company Law
Tribunal or Reserve Bank of India or any Court
or any other Tribunal, on the company.
(vii) In our opinion, the company has an internal audit
system commensurate with its size and nature of
its business.
(viii) We have broadly reviewed the books of account
maintained by the company relating to the
manufacture of steel and automotive parts and
accessories pursuant to the rules made by the
Central Government for the maintenance of cost
records under Section 209 (1)(d) of the
Companies Act, 1956 and we are of the opinion
that prima facie the prescribed accounts and
records have been maintained and are being
made up. We have not, however, made a detailed
examination of the records with a view of
determining whether they are accurate or
complete.
(ix) (a) According to the information and explanations
given to us and according to the books and
records as produced and examined by us, in
our opinion, the undisputed statutory dues
including provident fund, investor education
and protection fund, employees’ state
insurance, income tax, sales tax, wealth tax,
service tax, customs duty, excise duty, cess
and other material statutory dues as
applicable have generally been regularly
deposited by the company during the year
with the appropriate authorities. According to
the information and explanations given to us,
there are no arrears of outstanding statutory
dues as mentioned above as at 31st March,
2008 for a period of more than six months
from the date they became payable.
(b) As at 31st March, 2008 according to the
records of the company and the information
and explanations given to us, the following
are the particulars of disputed dues on
account of income tax, sales tax, wealth tax,
service tax, custom duty, excise duty and cess
matters that have not been deposited on
account of any dispute.
Name of the Nature of the Amount Period to Forum where pendingstatute dues disputed which the [some of these can be clubbed]
Rs. Crores amount relates
Income Tax Laws Income Tax 0.09 F.Y. 1989-90 Income Tax Appellate Tribunal
Income Tax 0.14 F.Y. 2000-01 Income Tax Appellate Tribunal
Income Tax 0.09 F.Y. 2002-03 Commissioner of Income Tax (Appeal)
Custom Duty Laws Custom Duty 8.21@ February 1994 Custom, Excise & Service TaxAppellate Tribunal
Excise Duty Laws Excise Duty 3.65 September 1998 Custom, Excise & Serviceto February 2006 Tax Appellate Tribunal
Excise Duty 0.93 July 2001 to Deputy CommissionerJune 2003
Excise Duty 0.94 July 2003 to Assistant CommissionerFebruary 2005
Excise Duty 2.33 April 1997 to High CourtSeptember 1999
Excise Duty 1.21 March 2005 to Joint CommissionerOctober 2006
Excise Duty 0.73 April 2000 to CommissionerDecember 2003
and November 2006to July 2007
@ The amount has been stayed for recovery by the relevant authority.
ANNUAL REPORT 2007-2008
39
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(x) The company does not have accumulated losses
as at 31st March, 2008 and has not incurred
cash losses during the financial year ended on
that date or in the immediately preceding financial
year.
(xi) In our opinion and according to the information
and explanations given to us, the company has
not defaulted in repayment of its dues to a
financial institution, bank or to debenture holders
during the year.
(xii) In our opinion and according to the information
and explanations given to us, the company has
not granted any loans and advances on the basis
of security by way of pledge of shares, debentures
and other securities.
(xiii) The provisions of any special statute as specified
under Clause (xiii) of the Order are not applicable
to the company.
(xiv) In our opinion and according to the information
and explanations given to us, the company is not
a dealer or trader in securities.
(xv) According to the information and explanations
given to us, the company has not given any
guarantees for loans taken by others from banks
or financial institutions, the terms and conditions,
whereof, in our opinion, are prejudicial to the
interests of the company.
(xvi) In our opinion and according to the information
and explanations given to us, the term loans were
applied for the purpose for which the loans were
obtained.
(xvii) Based on the information and explanations given
to us and on an overall examination of the balance
sheet of the company, in our opinion, there are
no funds raised on a short term basis which have
been used for long term investment.
(xviii)The company has not made any preferential
allotment of shares to parties and companies
covered in the register maintained under Section
301 of the Companies Act, 1956 during the year.
(xix) As the company has no debentures outstanding
at any time during the year, clause 4 (xix) of the
Order is not applicable to the company.
(xx) The company has not raised any money by public
issue during the year.
(xxi) According to the information and explanations
given to us, during the year, no fraud on or by
the company has been noticed or reported.
For A. F. Ferguson & Co.
Chartered Accountants
B. P. Shroff
(Partner)
Membership Number: 34382
Mumbai: 29th April, 2008
MAHINDRA UGINE STEEL COMPANY LIMITED
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BALANCE SHEET AS AT 31ST MARCH, 200831st March, 2008 31st March, 2007
Schedule Rs. Crores Rs. Crores Rs. Crores
SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS
SHARE CAPITAL A 32.48 32.48
EMPLOYEES STOCK OPTIONS OUTSTANDING 1.16 0.58
RESERVES AND SURPLUS B 155.39 137.30
189.03 170.36
LOAN FUNDS
SECURED LOANS C 178.49 106.07
UNSECURED LOANS D 138.11 101.35
316.60 207.42
Deferred Tax Liability [Net] (see note 22) 17.02 12.87
522.65 390.65
APPLICATION OF FUNDS
FIXED ASSETS E
Gross Block 410.22 317.05
Less : Depreciation 208.73 183.80
Net Block 201.49 133.25
Capital Work-in-progress 90.91 99.75
292.40 233.00
INVESTMENTS F 0.42 0.52
CURRENT ASSETS, LOANS AND ADVANCES G
Inventories 143.53 124.17
Sundry Debtors 203.79 165.02
Cash and Bank Balances 25.47 20.84
Loans and Advances 43.93 38.57
416.72 348.60
LESS : CURRENT LIABILITIES AND PROVISIONS H
Current Liabilities 169.64 168.15
Provisions 17.28 23.52
186.92 191.67
Net Current Assets 229.80 156.93
MISCELLANEOUS EXPENDITURE (See note 25)
(to the extent not written off or adjusted)
Special payments under Voluntary Retirement Scheme 0.03 0.20
0.03 0.20
522.65 390.65
Notes to the Accounts L
Significant Accounting Policies M
Keshub Mahindra Chairman
Anand G. Mahindra Vice Chairman
K. V. Ramarathnam Managing Director
Deepak Dheer Executive Director
Dr. Homi N. Sethna
M. R. Ramachandran
R.R. Krishnan Directors
Hemant Luthra
Rajeev Dubey
The Schedules referred to herein form an
integral part of the Balance Sheet
As per our report of even date attached
For A. F. Ferguson & Co.
Chartered Accountants
B. P. Shroff R. Sundaresan Ajay Kadhao
Partner Executive Vice President Company Secretary
- Finance & MIS
Mumbai : 29th April, 2008 Mumbai : 29th April, 2008
}
ANNUAL REPORT 2007-2008
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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008
31st March, 2008 31st March, 2007Schedule Rs. Crores Rs. Crores Rs. Crores
INCOME
SALE OF PRODUCTS/OTHER INCOME FROM OPERATIONSSale of products (Gross) (see note 12) 951.03 729.15Less : Excise Duty 128.45 102.02
822.58 627.13Income from processing (Gross) (see note 12) 89.75 80.73Less : Excise Duty 41.04 34.79
48.71 45.94Arising, dies and other sales(Gross) 55.30 48.97Less : Excise Duty 7.09 7.13
48.21 41.84Miscellaneous Receipts (see note 13) 2.68 2.32
922.18 717.23Other Income I 2.76 1.68Increase / (decrease) in stocks J 16.13 (4.39)
941.07 714.52
EXPENDITURE
Manufacturing and other expenses K 841.54 617.79
Depreciation E 26.71 16.73
Interest (see note 8) 28.63 11.83
896.88 646.35
PROFIT BEFORE TAX 44.19 68.17
Provision for tax
-Current Tax (and Fringe Benefit Tax) 10.55 24.82
-Deferred Tax (see note 22) 4.15 (1.55)
14.70 23.27
PROFIT AFTER TAX 29.49 44.90
Balance of profit for earlier year 49.07 37.33
PROFIT AVAILABLE FOR APPROPRIATION 78.56 82.23
Proposed Dividend on Equity Shares 9.74 8.12
Interim Dividend Paid on Equity Shares — 6.50
Interim Dividend Paid on Preference Shares — 0.22
Tax on Dividend 1.66 2.32
Transfer to General Reserve Account 2.95 16.00
BALANCE CARRIED FORWARD 64.21 49.07
Earnings per share (basic) (face value Rs.10) 9.08 13.75
Earnings per share (diluted) (face value Rs.10) 9.04 13.71
(see note 23)
Notes to the Accounts L
Significant Accounting Policies M
The Schedules referred to herein form an
integral part of the Balance Sheet
As per our report of even date attached to the Balance Sheet
For A. F. Ferguson & Co.
Chartered Accountants
B. P. Shroff R. Sundaresan Ajay Kadhao
Partner Executive Vice President Company Secretary
- Finance & MIS
Mumbai : 29th April, 2008 Mumbai : 29th April, 2008
Keshub Mahindra Chairman
Anand G. Mahindra Vice Chairman
K. V. Ramarathnam Managing Director
Deepak Dheer Executive Director
Dr. Homi N. Sethna
M. R. Ramachandran
R.R. Krishnan Directors
Hemant Luthra
Rajeev Dubey
}
MAHINDRA UGINE STEEL COMPANY LIMITED
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CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores Rs. Crores
A. CASH FLOW FROM OPERATING ACTIVITES
Net Profit before tax and exceptional item 44.19 68.17
Adjustment for:
Depreciation 26.71 16.73
Dividend Income (0.00)* (0.00)*
Interest and commitment charges 28.63 11.83
Amortisation of expenses 0.17 0.97
Provision for Debts/Advances 0.78 1.61
Employees Stock Option Charge 0.58 0.58
Foreign Exchange Difference (Gain) (0.36) —
Profit on sale of investment (1.39) —
(Profit) / Loss on sale of fixed assets (net) (0.17) 0.21
Interest income (0.71) (0.76)
Provision for premium payable on Redemption
of Cumulative Preference Shares — 0.20
54.24 31.37
Operating Profit before Working Capital changes 98.43 99.54
Changes in
Trade and other receivables (45.14) (23.29)
Inventories (19.36) (23.63)
Trade and other Payables (4.74) 46.64
(69.24) (0.28)
Cash generated from operations 29.19 99.26
Income-tax paid (20.40) (22.08)
NET CASH FROM OPERATING ACTIVITIES 8.79 77.18
B. CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets (75.92) (142.30)
Sale of fixed assets 0.37 0.16
Sale of investments 1.49 —
Dividends received 0.00* 0.00*
Interest received 1.19 0.88
NET CASH (USED IN) / FROM INVESTING ACTIVITIES (72.87) (141.26)
C. CASH FLOW FROM FINANCING ACTIVITIES
Redemption of Preference Shares — (5.46)
Premium on Redemption of Preference Shares — (1.05)
Proceeds from borrowings 472.00 161.65
Repayment of borrowings (363.52) (53.77)
Dividends paid including Taxes (13.20) (20.60)
Interest and commitment charges paid (26.57) (11.21)
NET CASH (USED IN) / FROM FINANCING ACTIVITIES 68.71 69.56
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 4.63 5.48
CASH AND CASH EQUIVALENTS :
Opening Balance 20.84 15.36
Closing Balance 25.47 20.84
* denotes amounts less than Rs. 50,000
See Notes attached
ANNUAL REPORT 2007-2008
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31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores
1 Cash and cash equivalents include:
Cash and cheques on hand 0.08 2.73
Balance with scheduled banks:
In Current Accounts 25.06 17.80
In Deposit Accounts 0.33 0.31
Total cash and cash equivalents 25.47 20.84
2 Previous year’s figures have been regrouped wherever necessary to conform to this year’s classifications.
NOTES TO CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008
As per our report of even date attached
For A. F. Ferguson & Co.
Chartered Accountants
B. P. Shroff R. Sundaresan Ajay Kadhao
Partner Executive Vice President Company Secretary
- Finance & MIS
Mumbai : 29th April, 2008 Mumbai : 29th April, 2008
Keshub Mahindra Chairman
Anand G. Mahindra Vice Chairman
K. V. Ramarathnam Managing Director
Deepak Dheer Executive Director
Dr. Homi N. Sethna
M. R. Ramachandran
R.R. Krishnan Directors
Hemant Luthra
Rajeev Dubey
}
MAHINDRA UGINE STEEL COMPANY LIMITED
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SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores Rs. Crores
SCHEDULE ‘A’ - SHARE CAPITAL
AUTHORISED:
119,000,000 Equity Shares of Rs.10 each 119.00 34.00
(2006-07: 34,000,000 equity shares of Rs. 10 each)
— 11% Redeemable Cumulative
Preference Shares of Rs. 100 each — 1.00
(2006-07:100,000 preference shares of Rs. 100 each)
3,100,000 Redeemable Cumulative
Preference Shares of Rs. 100 each 31.00 30.00
(2006-07: 3,000,000 shares of Rs. 100 each)
150.00 65.00
ISSUED, SUBSCRIBED AND PAID-UP (see note 1)
32,482,529 Equity Shares of Rs.10 each, fully paid-up 32.48 32.48
32.48 32.48
(16,466,789 equity shares (2006-07: 16,466,789) are held by Mahindra Holdings
& Finance Ltd, the holding company and the ultimate holding company is Mahindra & Mahindra Ltd.)
SCHEDULE ‘B’ - RESERVES AND SURPLUS
Capital Reserve (on redemption of preference shares,
being the amount originally paid-up on shares forfeited) :
- As per last Balance Sheet 0.00* 0.00*
Capital Redemption Reserve Account
As per last Balance Sheet 16.46 11.00
Add: Transferred from General Reserve Account — 5.46
16.46 16.46
Special Reserve (in terms of Section 45IC of the
Reserve Bank Of India Act,1934) (on amalgamation) 0.17 0.17
General Reserve
As per last Balance Sheet 71.60 62.27
Add : Transfer from Profit and Loss Account 2.95 16.00
Less : Charge up to 31.3.2006 on adoption of Revised
Accounting Standard 15 Employee Benefits
(net of tax Rs. 0.62 crores) — 1.21
(see note 29)
Less : Transferred to Capital Redemption Reserve Account — 5.46
74.55 71.60
Balance as per Profit and Loss Account 64.21 49.07
155.39 137.30
*denotes amounts less than Rs. 50,000
ANNUAL REPORT 2007-2008
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SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores
SCHEDULE ‘C’ - SECURED LOANS (see note 9)
Term loan from Banks 99.93 79.83
(repayable within one year Rs. 23.43 crores
2006-07 : Rs. 23.80 crores)
Advances from Banks 78.56 26.24
178.49 106.07
The above loans include interest accrued and due of Rs. 0.70 crores; (2006-07 Rs. Nil)
SCHEDULE ‘D’ - UNSECURED LOANS
Fixed Deposits (repayable within a year Rs. 0.59 crores
2006-07: Rs. 2.74 crores) 0.59 3.32
Short Term Advances
- from Banks 50.02 40.61
Other Loans
- from Banks 87.50 57.42
138.11 101.35
SCHEDULE ‘E’ - FIXED ASSETS (Rs. Crores)
COST DEPRECIATION WRITTEN DOWN VALUE
ASSETS As On Additions Deductions As On Up To For the Adjustments Upto As on As on
1.4.2007 and and 31.3.2008 31.3.2007 year 31.3.2008 31.3.2008 31.3.2007
adjustments adjustments
Freehold land 1.12 — 0.11 1.01 — — — — 1.01 1.12
Leasehold land 0.62 0.33 — 0.95 0.06 0.04 — 0.10 0.85 0.56
Buildings 38.94 3.92 — 42.86 15.10 1.27 — 16.37 26.49 23.84
Plant and Machinery 264.18 85.32 0.15 349.35 161.50 22.72 0.14 184.08 165.27 102.68
Furniture, fixtures and
office equipments 8.88 4.28 1.53 11.63 5.58 2.08 1.49 6.17 5.46 3.30
Vehicles 2.83 0.74 0.19 3.38 1.42 0.48 0.15 1.75 1.63 1.41
Software Expenditure 0.48 0.56 — 1.04 0.14 0.12 — 0.26 0.78 0.34
317.05 95.15 1.98 410.22 183.80 26.71 1.78 208.73 201.49
Previous year 269.63 48.22 0.80 317.05 167.50 16.73 0.43 183.80 133.25
Capital work-in-progress 90.91 99.75
292.40 233.00
Notes :
Additions to Plant and Machinery includes exchange difference of Rs. Nil (2006-07 : Rs. 0.09 crores)
Additions to Plant and Machinery and Capital work in progress includes interest capitalised of Rs. 6.81 crores (2006-07 : 2.95 crores)
MAHINDRA UGINE STEEL COMPANY LIMITED
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SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores Rs. CroresSCHEDULE ‘F’ - INVESTMENTS (at cost- Long term)(Unquoted, unless otherwise stated)
Trade :
Shares (fully paid up)
— Orissa Sponge Iron Ltd.Nil equity shares of Rs. 10 each, (quoted) — 0.03(21,739 equity shares sold during the year)
— Dena Bank
9,917 equity shares of Rs. 10 each, (quoted) 0.03 0.10(24,583 equity shares sold during the year)
Non -Trade :Shares (fully paid up)In other companies :
— Mahindra Hotels and Resorts Ltd.49,990 equity shares of Rs. 10 each 0.05 0.05
— Mahindra & Mahindra Contech Ltd.35,000 equity shares of Rs. 10 each 0.04 0.04
— Window of the World Motels Pvt. Ltd.2 equity shares of Rs. 100 each 0.00* 0.00*
— Mahindra Construction Co. Ltd.300,000 equity shares of Rs. 10 each 0.30 0.30
— Kotak Mahindra Bank3,000 equity shares of Rs. 10 each (quoted) 0.00* 0.00*
— The Indian and Eastern Engineer Co. Ltd.3 ordinary shares of Rs. 10 each 0.00* 0.00*
10,000 equity shares of Rs.10 each 0.02 0.02
Other Investments :
— Unit Trust of India -33,230 6.75% Tax free Bonds of Rs.100 each (quoted) 0.33 0.33
0.77 0.87Less : Provision for diminution in value of investments 0.35 0.35
0.42 0.52
Notes : (1) Aggregate of quoted investments :— Cost 0.36 0.46— Market Value 0.57 0.65
(2) Aggregate of unquoted investments :— Cost 0.41 0.41
* denotes amounts less than Rs. 50,000
SCHEDULE ‘G’ - CURRENT ASSETS, LOANS AND ADVANCES
Inventories :
Stores and spare parts 28.78 28.02
Loose tools 0.80 0.14
Raw materials 51.75 49.94
Semi-finished goods 55.73 40.45
Finished goods 6.47 5.62
143.53 124.17Sundry Debtors : (unsecured)
Over six months— considered good 15.05 5.70— considered doubtful 6.71 5.72Others— considered good 188.74 159.32
210.50 170.74Less : Provision for doubtful debts 6.71 5.72
203.79 165.02
ANNUAL REPORT 2007-2008
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SCHEDULE ‘G’ - (Contd)
Cash and Bank Balances :
Cash on hand 0.08 0.05
Cheques on hand — 2.68
Balances with Scheduled Banks
— in Current accounts 25.06 17.80
— in Fixed Deposit accounts 0.33 0.31
25.39 18.11
25.47 20.84
Loans and Advances :
(unsecured)
Advances recoverable in cash or in kind
or for value to be received :
— considered good 36.64 34.81
— considered doubtful 2.75 2.96
39.39* 37.77*
Less : Provision for doubtful advances 2.75 2.96
36.64 34.81
Taxation - advance payments less provision 7.25 3.31
Balances - Excise, Port Trust, etc. 0.04 0.45
43.93 38.57
416.72 348.60
*including capital advance of 4.32 8.01
SCHEDULE ‘H’ - CURRENT LIABILITIES AND PROVISIONS
CURRENT LIABILITIES : **
Acceptances 75.60 77.98
Sundry Creditors (see note 19)
Total outstanding dues of :
- micro enterprises and small enterprises — —
- creditors other than micro enterprises
and small enterprises 90.94 85.64
90.94 85.64
Dividend warrants posted but not encashed 0.28 3.07
Interest warrants posted but not encashed 0.06 0.18
Interest accrued but not due on loans 2.76 1.28
169.64 168.15
PROVISIONS :
Provision for taxation (net of payments) — 5.91
Provision for Employee Benefits (See note 29) 5.88 3.74
Provision for contingencies (See note 21) — 3.46
Provision for dividend on equity shares 9.74 8.12
Provision for tax on dividend 1.66 2.29
17.28 23.52
186.92 191.67
**There is no amount due and outstanding to be credited to the Investor Education and Protection Fund.
SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores Rs. Crores Rs. Crores
MAHINDRA UGINE STEEL COMPANY LIMITED
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SCHEDULES ANNEXED TO AND FORMING PART OF THE PROFIT AND LOSS ACCOUNT
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores Rs. Crores
SCHEDULE ‘I’ - OTHER INCOME
OTHER INCOME
Dividends from long term investments:
— Trade 0.00* 0.00*
— Non Trade - Others 0.00* 0.00*
0.00* 0.00*
Interest :
On long term investments
— Non Trade 0.03 0.03
— Others [including tax deducted/deductible at source
Rs. 0.15 crore (2006-07 : Rs. 0.16 crores)] 0.68 0.73
Rent 0.03 0.20
Profit on sale of assets (net) 0.17 —
Profit on sale of long term - trade investments 1.39 —
Miscellaneous Income 0.46 0.72
2.76 1.68
* denotes amounts less than Rs. 50,000
SCHEDULE ‘J’ - INCREASE/(DECREASE) IN STOCKS
Increase / (Decrease) in stock of
Finished goods and Semi-finished goods
Opening stock :
Semi-finished goods 40.45 46.84
Finished goods 5.62 3.62
Total 46.07 50.46
Less:
Closing stock :
Semi-finished goods 55.73 40.45
Finished goods 6.47 5.62
62.20 46.07
Increase/(Decrease) in Stocks 16.13 (4.39)
ANNUAL REPORT 2007-2008
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SCHEDULES ANNEXED TO AND FORMING PART OF THE PROFIT AND LOSS ACCOUNT
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores Rs. Crores
SCHEDULE ‘K’ - MANUFACTURING AND OTHER EXPENSES
1 Raw materials and bought out components consumed
[including outside processing costs Rs. 18.81crores
2006-07 - Rs.6.37 crores (see note 10(a))] 547.76 376.14
2 Cost of dies sold 2.83 —
3 Goods purchased for resale [ see note 12(B)] 1.01 1.55
4 Payment to and provision for employees :
(a) salaries, wages, bonus, etc. 41.93 31.98
(b) company’s contribution to provident and other funds 3.04 2.16
(c) staff welfare expenses 7.66 5.97
(d) gratuity 1.92 1.09
54.55 41.20
5 Operating and other expenses:
(a) stores consumed 61.02 45.95
(b) repairs and maintenance to buildings
(including stores consumed : Rs. 0.73 crores
2006-07 : Rs.0.98 crores) 1.42 4.41
(c) repairs and maintenance to machinery
(including stores and spare parts consumed
Rs.8.05 crores ; 2006-07 : Rs.12.80 crores) 13.54 17.45
(d) repairs and maintenance to others 3.64 2.63
(e) power and fuel 122.89 100.83
(f) rent (net) 1.57 0.09
(g) rates and taxes (net) 1.78 1.66
(h) insurance charges 0.71 0.68
(i) bad debts/advances written off 1.71 —
(j) provision for doubtful debts/advances (net) 0.78 1.61
(k) other expenses (see note 5) 25.38 22.79
(l) amortisation of deferred revenue expenditure :
— Building renovation and repairs expenses — 0.00*
— Special payments under Voluntary Retirement Scheme 0.17 0.39
234.61 198.49
6 Loss on sale of assets (net) — 0.21
7 Excise duty 0.78 (0.00)*
8 Provision for premium payable on redemption of
cumulative preference shares — 0.20
841.54 617.79
* denotes amounts less than Rs. 50,000
MAHINDRA UGINE STEEL COMPANY LIMITED
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SCHEDULE ‘L’ NOTES TO ACCOUNTS
1. The Subscribed Capital includes:
a) 30,000 Equity shares allotted as fully paid-up pursuant to contracts without payment having been received in cash;
b) 600,000 Equity shares allotted consequent to the Scheme of Amalgamation with Bank of Baroda Ltd.;
c) 821,319 Equity shares allotted on conversion of 10% Convertible Series ‘G’ Debentures of the face value of Rs. 2.05 Crores at a
premium of Rs.15 per share. These debentures were originally issued consequent to the Scheme of Amalgamation with Bank of
Baroda Ltd.;
d) 11,000,000 Equity shares allotted as fully paid-up (at a premium of Rs. 35 per share) pursuant to a contract to discharge part of
the consideration for acquisition of the Company’s Stamping Unit at Kanhe;
e) 3,650,866 Equity shares allotted as fully paid-up Bonus shares by way of capitalisation of share premium account and accumulated
profits;
f) 15,50,840 Equity shares allotted consequent to the Scheme of Amalgamation of Pranay Sheetmetal Stampings Limited (Pranay),
Valueline Hotels and Resorts Limited (Valueline) and Console Estate and Investments Limited (Console) with the Company.
2. The Company has entered into a Shares Subscription Agreement with Wardha Power Company Private Ltd. on 29th February, 2008 to
invest Rs. 22.75 Crores by way of subscription to 61,67,778 Class A Equity Shares of Rs. 10 each and 78,32,222 Class A 0.01%
Redeemable Preference Shares of Rs. 10 each and 87,50,000 Class C 0.01% Redeemable Preference Shares of Rs. 10 each. The
Company will be entitled to 35 MW of power generated from the Group Captive Power Plant as per the Power Delivery Agreement
dated 29th February, 2008.
3. Estimated amount of contracts remaining to be executed on capital account and not provided for as on 31st March, 2008 is Rs. 22.33
Crores (2006-2007 : Rs. 21.48 Crores).
4. Invoices raised during the period for price differences/interest on delayed payments, which are under negotiation, are accounted for if
and when realised.
5. Other expenses in Schedule ‘K’ include :
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores
(a) Remuneration of auditors **
Audit fees 0.18 0.14
Company Law Matters * 0.00 * 0.00
Other services 0.09 0.07
Reimbursement of out of pocket expenses * 0.00 0.01
(b) (i) Cash discount on sales 0.30 0.32
(ii) Commission to other selling agents 0.67 0.77
(c) Donation 0.25 0.27
Note: * Denotes amount less than Rs. 50,000/-
** Amounts mentioned are net of service tax
6. Managerial remuneration for directors included in the Profit and Loss Account is Rs. 1.65 Crores (2006-2007 : Rs. 1.25 Crores)
including contribution to provident fund and other funds Rs. 0.12 Crores (2006-2007 : Rs. 0.10 Crores), perquisites Rs. 0.47 Crores
(2006-2007 : Rs. 0.39 Crores) and commission Rs. 0.40 Crores (2006-2007 : Rs. 0.35 Crores) and sitting fees payable to non-whole-
time directors Rs. 0.05 Crores (2006-2007 : Rs. 0.04 Crores). The above perquisites include amortisation of Employees Stock Option
amounting to Rs. 0.11 Crores (2006-2007 : 0.11 Crores). The provisions for gratuity and leave encashment are not included above as
separate figures are not available.
Computation of Net Profit in accordance with Section 309(5) of the Companies Act, 1956 for the year ended 31st March, 2008
31st March, 2008 31st March, 2007
Rs Crores Rs Crores
Profit before taxation as per Profit and Loss Account 44.19 68.17
Add : Directors’ Remuneration including Directors’ Fees 1.65 1.25
: Provision for Doubtful Debts / advances (net) 0.78 1.61
46.62 71.03
Less: Capital profit from the sale of immovable property / assets 0.15 —
: Profit on sale of Long term – trade Investments (net) 1.39 —
Profit for the purpose of Directors’ commission : 45.08 71.03
Commission payable to managing and whole time directors 0.40 0.35
ANNUAL REPORT 2007-2008
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7. Contingent Liabilities not provided for in respect of :
a) Bills discounted but not matured Rs. 6.57 Crores (2006-2007 : Rs. 4.71 Crores).
— Represents customers’ bills discounted.
b) Excise duty:
i) Claims against the Company not acknowledged as debts Rs. 0.70 Crores (2006-2007 : Rs. 0.70 Crores).
ii) Other Excise matters for which the Company is contingently liable Rs. 9.68 Crores (2006-2007 : Rs. 8.37 Crores). This
includes:
a) Rs. 0.62 Crores (2006-2007 : Rs. 0.62 Crores) - relating to the method of valuation of customer processed finished
goods for the purpose of discharge of excise duty, where the customer supplies raw material. This matter has been
settled by Custom, Excise & Service Tax Appellate Tribunal (CESTAT) in favour of the Company. The Department has
gone in further appeal in the Supreme Court.
b) Rs. 2.33 Crores (2006-2007 : Rs. 2.33 Crores) - relating to inclusion of scrap credit in the assessable value for the
purpose of payment of Excise Duty. The Supreme Court has remanded the case back to CESTAT who has decided
against the company. The Company has filed a writ petition in the High Court.
c) Rs. 0.41 Crores (2006-2007 : Rs. 0.06 Crores) - being other matters.
In respect of (b) (ii) (b) above and other valuation issues, the Department has continued to issue show cause cum
demand notices for subsequent periods aggregating Rs. 6.32 Crores (2006-2007 : Rs. 5.37 Crores).
c) Taxation demands against which the Company is in appeal Rs. 1.85 Crores (2006-2007 : Rs. 1.85 Crores) and, decisions in
favour of the Company against which the Department is in appeal Rs. 1.50 Crores (2006-2007 : Rs. 1.50 Crores) .
d) Other claims against the Company not acknowledged as debts :
i. Rs. 8.21 Crores (2006-2007 : Rs. 7.67 Crores) pertaining to show cause notice for payment of custom duty in respect of the
Value Based Advance Licenses (VBAL) purchased by the Company and used for import of goods. As the export obligation
against the above VBAL was already fulfilled by the seller of the license, the Company appealed against the said notice with
CESTAT who has granted a stay.
ii. Claim pertaining to material supply contract Rs. 8.82 Crores (2006-2007 : Rs. Nil).
e) Other matter for which the Company is contingently liable is Rs. 20.36 Crores (2006-2007 : Rs. 17.50 Crores). This represents the
dispute in the rate of water charges demanded by the Irrigation Department based on a unilateral increase in rates and the
amount which the Company has been paying. The above amount includes an initial demand raised by the Irrigation Department of
Rs. 0.57 Crores up to 31st March, 1995 which was decided in favour of the Company in the court of the Civil Judge, Senior
Division Panvel. The balance of Rs. 19.79 Crores (2006-2007 : Rs. 16.93 Crores) represents differential demands raised by the
Irrigation Department for subsequent periods.
8. Interest:
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores
On fixed loans 10.05 3.40
On others 18.58 8.43
28.63 11.83
9. (a) Term loans from Banks are secured by a first equitable mortgage on all immovable property and plant and machinery attached to
the earth, both present and future, ranking pari-passu.
(b) Advances for working capital from Banks are secured by hypothecation of raw materials, finished goods, goods in process, stores,
book debts, specified movable assets, etc. These advances are also secured by a joint equitable mortgage on the immovable
properties of the Company situated at Khopoli, Kanhe, Nasik and Rudrapur, the mortgage to rank second and subservient to the
mortgage created in respect of (a) above.
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10. Raw materials and bought out components consumed.
31st March, 2008 31st March, 2007
Qty Value Qty Value
M/T Rs. Crores M/T Rs. Crores
a) 1) Ferrous scrap 151,178 263.37 133,734 202.61
2) Ferro alloys 6,521 163.11 5,930 117.89
3) Other metals 2,299 9.42 1,815 8.22
4) Slag making materials 10,946 5.30 10,676 4.39
5) Metal Sheets 12,502 58.99 7,427 27.89
6) Purchased Billets 2,640 13.02 — —
7) Components — 15.74 — 8.77
8) Processing charges — 18.81 — 6.37
547.76 376.14
31st March, 2008 31st March, 2007
Rs. Crores % Rs. Crores %
b) Imported – at landed cost 184.81 34 123.40 33
Indigenously obtained 362.95 66 252.74 67
547.76 100 376.14 100
11. Stores and spares consumed :
31st March, 2008 31st March, 2007
Rs. Crores % Rs. Crores %
Imported – at landed cost 5.61 8 5.86 10
Indigenously obtained 64.19 92 53.87 90
69.80 100 59.73 100
Consumption in value is after adjusting excesses and shortages ascertained on physical verification and write off for deterioration,
unserviceable items, etc.
12. Information for class of goods manufactured, traded in :
A. Particulars in respect of goods manufactured:
Class of Unit Licensed Installed Actual Opening Stock Closing Stock Sales [see note (iv)]
Goods of Capacity Capacity production
Measure- Per Per [see note Qty Value Qty Value Qty Value
ment Annum [see Annum (iv)] Rs.Crores Rs.Crores Rs.Crores
note (i) and [see note
(ii)] (iii)]
Tool, alloy and M/T 180,000 180,000 131,452 779 3.62 829 4.38 131,402 734.54
Special steel M/T (180,000) (180,000) (121,317) (561) (2.60) (779) (3.63) (121,099) (585.56)
Pressed Sheet
metal components M/T 35,800 35,800 36,210 455 2.00 612 2.09 36,053 135.72
and assemblies M/T (31,000) (31,000) (29,500) (407) (1.01) (455) (2.00) (29,452) (86.08)
Notes :
(i) In respect of Tool, alloy and Special Steel, the industrial licence permits manufacture of castings and forgings up to 2000 M/T
within the above overall licensed capacity.
(ii) In respect of Pressed Sheet metal components and assemblies, the licensed capacity is as per the Memorandum filed with, and
duly acknowledged by the Secretariat for Industrial Assistance.
(iii) Installed capacity on an integrated basis is certified by the Managing Director and not verified by the auditors since this is a
technical matter.
(iv) Production and sales in respect of Pressed Sheet metal components and assemblies includes customer’s materials processed.
(v) Installed and licensed capacities for Pressed Sheet metal components and assemblies are for 2 shift working. Nasik and Kanhe
units have worked on 3 shift basis during the year.
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B. Particulars in respect of goods traded in :
Class of Goods Unit of Purchase Closing Stock Sales
Measurement Qty. Value Qty. Value Qty. Value
Rs. Crores Rs. Crores Rs. Crores
Others Mix — 1.01 — — — 1.03
Mix (—) (1.55) (—) (—) (—) (1.43)
Total — 1.01 — — — 1.03
(—) (1.55) (—) (—) (—) (1.43)
Previous year’s figures have been disclosed in parenthesis.
13. Miscellaneous receipts includes :
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores
Income from services rendered 1.29 1.53
Credit Balance Written back 0.96 0.79
14. C.I.F. Value of Imports
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores
(a) Raw materials 190.45 144.84
(b) Stores and spares 6.14 5.93
(c) Capital goods 1.27 21.98
These include imports on :
Raw Materials Stores & Spares Capital
Rs. Crores Rs. Crores Rs. Crores
i) C & F Basis 41.66 0.33 —
(13.79) (0.13) (21.70)
ii) F.O.B. Basis — 1.99 —
(—) (1.07) (0.08)
iii) High Seas 51.16 — —
(81.77) (0.65) (—)
Total 92.82 2.32 —
(95.56) (1.85) (21.78)
Previous year’s figures have been disclosed in parenthesis.
15. Expenditure in foreign currency (on payment basis)
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores
Interest 4.26 0.94
Others 0.11 0.15
16. Earning in foreign exchange
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores
(a) F.O.B. Value of exports 5.02 2.01
(b) Freight and insurance 0.32 0.15
17. Research and Development expenditure debited to Profit and Loss Account aggregates Rs. 0.97 Crores (2006-2007 : Rs. 0.64 Crores)
consisting of salaries and power, based on allocations made by the Company and materials.
18. The net difference in foreign exchange (i.e. the difference between the spot rates on the date of the transaction and the actual rates at
which the transactions are settled/appropriate rates applicable at the year end) credited to the Profit and Loss Account is Rs. 9.18
Crores (2006-2007 : Credit of Rs. 1.48 Crores).
19. Sundry creditors include credit balances in current accounts with directors Rs. 2,403 (2006-2007 : Rs. 2,403).
MAHINDRA UGINE STEEL COMPANY LIMITED
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20. No Companies have been identified under the Micro, Small and Medium Enterprises Development Act, 2006 as on 31st March, 2008
and hence the disclosures as required by Notification No. GSR 719(E) dated 16th November, 2007 issued by Ministry of Corporate
Affairs are not applicable.
21. (a) Provision for contingencies Rs. Nil (2006-07 : Rs. 3.46 Crores) is in respect of employees. Labour demands were under
negotiations at certain locations of the Company which were settled during the year.
(b) The movement in above provision is as follows:
31st March, 2008 31st March, 2007
Provisions Rs. Crores Rs. Crores
Balance as at beginning of the year 3.46 3.65
Add : Provision made during the year Nil 2.93
Less : Utilisation during the year 2.75 1.93
Less : Provision reversed 0.71 1.19
Balance as at end of the year Nil 3.46
22. The components of Deferred tax liability and assets as at 31st March, 2008 are as under:
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores
Deferred tax liability :
— On fiscal allowances on fixed assets 21.27 17.05
21.27 17.05
Less: Deferred tax assets :
— On employee separation and retirement 2.00 * 1.31
— On provision for doubtful debts 2.02 1.69
— On provision for Contingencies — 1.18
— On other timing differences 0.23 —
Net Liability 17.02 12.87
* Includes Deferred Tax Asset of Rs. 0.62 Crores taken to general reserve (Also refer note 29 (D) ).
23. Earnings per share have been computed as under:
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores
a) Net Profit for the year after tax (Rs. Crores) 29.49 44.90
Less: Preference Dividend for the year including tax thereon (Rs. Crores) — 0.25
Adjusted profit (Rs. Crores) (A) 29.49 44.65
b) Weighted Average Equity Shares (Nos.) 32,482,529 32,482,529
c) Diluted Equity Shares (Nos.) 32,635,680 32,569,922
d) i) Basic Earnings per share (Rs.) (A)/(b) 9.08 13.75
ii) Diluted Earning per share (Rs.) (A)/(c) 9.04 13.71
24. Related parties disclosures:
a) Related parties where Control exists:
Holding Company Mahindra Holdings and Finance Limited
Ultimate Holding Company Mahindra & Mahindra Limited
b) Names of other related parties with whom transactions have taken place during the year
1) Fellow subsidiaries Mahindra Forgings Ltd w.e.f 27.12.2007
Mahindra Intertrade Limited
Mahindra International Limited
Bristlecone India Limited
Mahindra Gujarat Tractors Ltd
Mahindra Renault Pvt Ltd
Mahindra Sona Ltd
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* Denotes amount less than Rs. 50,000.
Previous year’s figures have been disclosued in parenthesis.
2) Key Management Personnel Mr. K. V. Ramarathnam, Managing Director
Mr. Deepak Dheer, Executive Director
c) Transactions carried out with the related parties referred to in (a) and (b) above in the ordinary course of business:
Rs. in crores
Holding Ultimate Associate Key ManagementCompany Holding Company Fellow Subsidiaries Personnel
Company
Sr. Particulars Mahindra Mahindra & Mahindra Mahindra Mahindra Mahindra Bristlecone Mahindra Mahindra Mahindra Mahindra Mr. K. V. Mr. DeepakNo. Holdings & Mahindra Forgings Forgings Gujarat Intertrade India Sona Interna- Steel Renault Ramarathnam Dheer
Finance Ltd. Ltd. Ltd./ Ltd./ Tractors Ltd. Ltd. Ltd. tional Service Pvt. Ltd.MAS Ltd. MAS Ltd. Ltd. Ltd. Centre
Ltd.
1 Purchases of — 0.01 14.18 0.95 — 51.86 — — — — — — —Goods or Services (—) (—) (18.94) (—) (—) (83.69) (—) (—) (—) (—) (—) (—) (—)
2 Receiving of — 1.82 — — — — 1.89 — — — — — —Services (—) (1.29) (—) (—) (—) (—) (0.59) (—) — (0.00)* (—) (—) (—)
3 Sale of Goods — 41.25 60.61 15.85 — 47.61 — 1.48 — — 14.98 — —(—) (2.71) (47.47) (—) (—) (36.06) (—) (—) (—) (—) (—) (—) (—)
4 Rendering of — 87.02 — — 0.01 — — — 2.08 — 1.02 — —Services (—) (79.75) (0.12) (—) (—) (—) (—) (—) (2.25) (—) (0.59) (—) (—)
5 Reimbursement of — — — — — — — — — — — —expenses (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)
6 Sale of Fixed — — — — — — — — — — — —Assets (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)
7 Recovery of — — — — — — — — — — — — —charges (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)
8 Deputation of — 1.66 — — — — — — — — — —Personnel charge (—) (0.97) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)
9 Remuneration to — — — — — — — — — — 0.85 0.75key managerial (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (0.81) (0.39)personnel
10 Finance:
Inter Corporate — — — — — — — — — — — — —Deposits taken (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)
Inter Corporate — — — — — — — — — — — — —Deposits Repaid (—) (2.00) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)
Equity Dividend 4.12 — — — — — — — — — — — —Paid (10.70) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)
Equity Dividend — — — — — — — — — — — — —Received (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)
Preference — — — — — — — — — — — — —Dividend Paid (0.38) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)
Interest expenses — — — — — 0.95 — — — — — — —(—) (0.23) (—) (—) (—) (1.76) (—) (—) (—) (—) (—) (—) (—)
Interest income — — — — — — — — — — — — —(—) (—) (—) (—) (—) (0.02) (—) (—) (—) (—) (—) (—) (—)
Preference Shares — — — — — — — — — — — — —issued (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)
Redemption ofPreference Shares — — — — — — — — — — — — —Including Premium (6.51) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)
Equity Shares sold — — — — — — — — — — — — —(—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)
11 Guarantees and — — — — — — — — — — — — —Collaterals (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)Received
12 Guarantees and — 10.00 — — — — — — — — — — —Collaterals lapsed/ (—) (34.00) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)returned
13 Security Deposit — 0.57 — — — — — — — — — — —paid (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)
14 Outstandings
Payables
i) Inter CorporateDeposits taken — — — — — — — — — — — — —(including (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)interest)
ii) Other payables — 0.77 — — — 11.36 0.30 — — — — — —(—) (1.91) (1.56) (—) (—) (15.14) (0.28) (—) (—) (—) (0.61) (—) (—)
Receivables
i) Investments infully convertibledebentures — — — — — — — — — — — — —(including (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)interest)
ii) Other — 21.07 — 14.39 0.00* — — 1.48 0.49 — 3.94 — —receivables (—) (14.41) (12.20) (—) (—) (—) (0.00)* (—) (0.47) (0.58) (—) (—)
iii) Provision for — — — — — — — — — — — — —doubtful debts (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)and advances
Guarantees and — — — — — — — — — — — — —Collaterals (—) (10.00) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)Received
Guarantees andCollaterals — — — — — — — — — — — — —given (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—) (—)
MAHINDRA UGINE STEEL COMPANY LIMITED
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25. Miscellaneous Expenditure
(to the extent not written off or adjusted)
Rs. Crores
Sr. Particulars Opening Incurred during Amortisation Closing
No. Balance the Year Balance
1 Building Renovation and repair expenses — — — —
*(—) (—) *(—) (—)
2 Special payments under Voluntary Retirement
Scheme 0.20 — 0.17 0.03
(0.59) (—) (0.39) (0.20)
Total 0.20 — 0.17 0.03
(0.59) — (0.39) (0.20)
Previous year’s figures have been disclosed in parenthesis.
* Denotes amounts less than Rs. 50,000/-
26. Derivative Instruments:
The Company has entered into Forward Exchange Contracts [being a derivative instrument], which are not intended for trading or
speculative purpose, but for hedge purpose, to establish the amount of reporting currency required or available at the settlement date
of certain payables and receivables. The following are the outstanding Foreign Exchange Contracts entered into by the Company as on
31st March, 2008:
Currency Amount in Crores Buy/Sell Cross Currency
US Dollar 0.02 Buy Rupees
(—) (—) (—) (—)
The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:
a. Amounts payable in foreign currency on account of the following:
Indian Rupees Foreign Currency
Crores Crores
• Import of goods and services 68.80 US $ 1.71
(47.62) (US $ 1.09)
(0.01) * (GBP 0.00)
(0.03) * (EURO 0.00)
b. Amounts receivable in foreign currency on account of the following:
Indian Rupees Foreign Currency
Crores Crores
• Export of goods and services 1.07 US $ 0.03
0.03 *EURO 0.00
(0.81) (US $ 0.02)
The Company has outstanding borrowings of JPY 235.72 Crores which is equivalent of US $ 2.00 Crores (2006-2007 : JPY 122.75
Crores which is equivalent of US $ 1.05 Crores) under the External Commercial Borrowing facility. These foreign currency loans and
interest thereon have been completely hedged using a swap structure converting the liability into a full fledged Rupee liability.
Previous year’s figures have been disclosed in parenthesis.
* Denotes amounts less than 50,000/-
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27. SEGMENT REPORTING
a) PRIMARY SEGMENT INFORMATION
(BUSINESS SEGMENT) Rs. Crores
2007-08 2006-07 2007-08 2006-07 2007-08 2006-07
External Sales Inter-segment Sales Total
1 Segment Revenue (Net)
-Steel 746.66 597.57 - - 746.66 597.57
-Stamping 175.52 119.66 - - 175.52 119.66
-Segment Total 922.18 717.23 - - 922.18 717.23
2 Segment Result
-Steel - - - - 55.34 47.64
-Stamping - - - - 19.61 35.58
-Segment Total - - - - 74.95 83.22
Unallocated corporate expenses net of
Unallocated income - - - - (2.84) (3.98)
Profit before interest & taxation - - - - 72.11 79.24
Interest expenditure - - - - (28.63) (11.83)
Interest Income - - - - 0.71 0.76
Provision for Taxation - - - - (14.70) (23.27)
3 Profit/(loss) After Taxation - - - - 29.49 44.90
Other Information
1 Segment Assets
-Steel - - - - 499.02 410.38
-Stamping - - - - 192.46 162.32
-Segment Total - - - - 691.48 572.70
Unallocated corporate assets - - - - 18.09 9.62
Total Assets - - - - 709.57 582.32
2 Segment Liabilities
-Steel - - - - 146.69 156.91
-Stamping - - - - 25.14 13.91
-Segment Total - - - - 171.83 170.82
Unallocated corporate liabilities - - - - 331.69 228.27
Total Liabilities - - - - 503.52 399.09
3 Capital Expenditure
-Steel - - - - 72.50 77.35
-Stamping - - - - 13.81 56.94
-Segment Total - - - - 86.31 134.29
4 Depreciation
-Steel - - - - 12.22 5.57
-Stamping - - - - 14.49 11.16
-Segment Total - - - - 26.71 16.73
5 Non cash expenditure other than depreciation
-Steel - - - - 0.83 2.00
-Stamping - - - - 0.12 -
-Segment Total - - - - 0.95 2.00
b) SECONDARY SEGMENT INFORMATION
(GEOGRAPHICAL SEGMENT)
1 Segment Revenue
-Within India 916.12 715.07
-Outside India 6.06 2.16
-Total Revenue 922.18 717.23
2 Segment Assets
-Within India 708.50 581.51
-Outside India 1.07 0.81
-Total Segment Assets 709.57 582.32
3 Capital Expenditure
-Within India 85.04 112.31
-Outside India 1.27 21.98
Total Capital Expenditure 86.31 134.29
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NOTES:
1. The Company has considered business segment as primary segment for disclosure. The segments have been identified taking
into account the organisational structure as well as the differing risk and returns of the segments. Steel segment comprises sale
of alloy steel. Stamping segment comprises sale of pressed metal components. Inter segment revenue is market led.
2. The geographical segments considered for disclosure are :
— Sales within India
— Sales outside India
28. The Company had granted 1,42,500 and 9,55,500 Options during the year ended 31st March, 2008 and 31st March, 2007 respectively to
eligible employees including Directors of the Company. Out of the above Options granted, 53,500 Options have lapsed during the year.
The equity settled Options vest one year from the date of the grant and are exercisable on specified dates in 4 tranches within a period
of 5 years from the date of vesting. The eligible employee must exercise a minimum of 50 (Fifty Only) Options or Options vested,
whichever is lower; and the Options in respect of each tranche may be exercised on the date of vesting or at the end of each year from
the date of vesting, provided that at the end of five (5) years from the date of vesting (or such extended period as may be decided by
the Remuneration Committee), the eligible employee may exercise all Options vested but not exercised by him/her failing which all the
unexercised Options shall lapse.
The Compensation costs of stock Options granted to employees are accounted by the Company using the intrinsic value method.
Summary of stock options No. of stock options Weighted average
exercise price (Rs.)
Options outstanding on 1st April, 2007 8,98,500 99.00
Options granted during the year 1,42,500 73.00
Options forfeited/lapsed during the year 53,500 90.00
Options exercised during the year — —
Options outstanding on 31st March, 2008 9,87,500 96.00
Options vested but not exercised on 31st March, 2008 2,15,875 99.00
Information in respect of options outstanding as at 31st March, 2008:
Exercise price Number of Options Weighted average
Remaining life
Rs. 99.00 8,63,500 3.5 Yrs
Rs. 73.00 1,24,000 3.5 Yrs
The fair value of options granted on 18th August, 2006 is Rs.67.25 per share.
The fair value of options granted during the year on 24th October, 2007 is Rs.43.39 per share.
The fair value has been calculated using the Black Scholes Options Pricing model and the significant assumptions made in this regard
are as follows:
Grant dated Grant dated
24th October, 2007 18th August, 2006
Risk free interest rate 7.95% 7.27%
Expected Life 3.5 Yrs 3.5 Yrs
Expected Volatility 60.00% 73.54%
Expected dividend yield 4.32% 4.65%
Exercise price Rs. 73.00 Rs. 99.00
Stock Price Rs. 85.50 Rs. 117.45
In respect of options granted under the Employee Stock Options Plan, in accordance with guidelines issued by the SEBI, the
accounting value of the options is accounted as deferred employee compensation, which is amortised on a straight line basis over a
period between the date of grant of options and eligible dates for conversion into equity shares. Consequently salaries, wages, bonus,
etc. includes Rs. 0.58 Crores (2006-07 : Rs. 0.58 Crores) being the amortization of deferred employees compensation, after adjusting
for reversals on account of options lapsed.
Had the Company adopted fair value method in respect of Options granted, the employee compensation cost would have been higher
by Rs.1.03 Crores (2006-07 : Rs. 0.99 Crores), Profit After Tax lower by Rs. 0.68 Crores (2006-07 : Rs. 0.66 Crores) and the diluted
earning per share would have been lower by Rs 0.20.
The above disclosures have been made consequent to the issue of Guidance Note on Accounting for Employee Share-based
Payments issued by the Institute of Chartered Accountants of India in the year 2005 and applicable for the period on or after 1st April,
2005.
ANNUAL REPORT 2007-2008
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29 A Defined Benefit Plans / Long Term Compensated Absences – As per Actuarial Valuation on 31st March, 2008:
A Defined Benefit Plans – As per Actuarial Valuation GRATUITY
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores
I Expenses recognised in the statement of Profit and Loss Account
for the year ended 31st March, 2008 (Disclosed in schedule ‘K’ under the
head ‘Payment to and provision for employees’)
1. Current Service Cost 0.47 0.43
2. Interest Cost 0.71 0.64
3. Expected return on plan assets (0.69) (0.70)
4. Actuarial (Gains)/ Losses 1.24 (0.04)
5. Total Expense 1.73 0.33
II Net Assets / (Liability) recognised in the Balance Sheet as at 31st March, 2008
1. Present Value of Defined Benefit Obligation as at 31st March, 2008 11.61 9.49
2. Fair value of plan assets as at 31st March, 2008 (10.28) (9.89)
3. Funded Status [Surplus/(Deficit)] (1.33) 0.40
4. Net Asset/(liability) as at 31st March, 2008 (1.33) 0.40
III Change in Obligation during the year ended 31st March, 2008
1. Present Value of Defined Benefit Obligation at the beginning of the year 9.49 9.05
2. Current Service Cost 0.47 0.43
3. Interest Cost 0.71 0.64
4. Actuarial (Gains)/ Losses 1.64 (0.17)
5. Benefit Payments (0.70) (0.46)
6. Present Value of Defined Benefit Obligation as at the end of the year 11.61 9.49
IV Change in Assets during the year ended 31st March, 2008
1. Plan assets at the beginning of the year 9.89 9.75
2. Expected return on plan assets 0.69 0.70
3. Contributions by employer - 0.03
4. Actual benefits paid (0.70) (0.46)
5. Actuarial gains/ (losses) 0.40 (0.13)
6. Plan assets at the end of the year 10.28 9.89
V The major categories of plan assets as a percentage of total Plan
Funded with LIC of India 100% 100%
VI Actuarial Assumptions: As at As at
31st March, 2008 31st March, 2007
1. Discount Rate 7.70% 8.00%
2. Expected rate of return on plan assets 8.00% 7.50%
3. Mortality pre-retirement 1994-96 1994-96
Mortality base Mortality base
4. Mortality post-retirement — —
5. Turnover rate 1 to 2% 1 to 2%
6. Salary escalation rate 6.00% 5.00%
B. Basis used to determine expected rate of return on assets:
This is based on expectation of the average long term rate of return expected on investments of the Fund during the estimated term of
the obligation.
C. The estimates of future salary increases, considered in actuarial valuation, takes into account the inflation, seniority, promotion and
other relevant factors.
D. During the year ended 31st March, 2007, the company had undertaken an early adoption of Accounting Standard 15 (Revised 2005)
“Employee Benefits” and in accordance with the transitional provision in the revised Accounting Standard, Rs 1.21 Crores (Net of
deferred tax Asset of Rs. 0.62 Crores) had been adjusted to the general reserve.
E. Company’s contribution paid/payable during the year to Officer’s Superannuation Fund and Provident Fund are recognized in the Profit
and Loss Account. There are no other obligations other than stated above. These amounts are recognized as an expense and included
in the Schedule ‘K’ of the Profit and Loss Account under the heading “Payment to and provision for employees” in line item Company’s
contribution to provident and other funds.
31st March, 2008 31st March, 2007
Rs. Crores Rs. Crores
i) Officer’s Superannuation Fund 0.68 0.28
ii) Provident Fund 2.05 1.65
30. Additional information pursuant to the provisions of Part IV of Schedule VI to the Companies Act, 1956 (See Schedule ‘N’)
31. Previous year’s figures have been regrouped wherever necessary to conform to this year’s classification.
MAHINDRA UGINE STEEL COMPANY LIMITED
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SCHEDULE ‘M’ - SIGNIFICANT ACCOUNTING POLICIES
1. Basis for preparation of accounts :
The accounts have been prepared to comply in all material respects with applicable accounting principles in India, the relevant
provisions of the Companies Act, 1956 including Accounting Standards notified under the said Act.
2. (A) Fixed Assets :
Fixed assets are recorded at historical cost of purchase and do not reflect current values. Cost includes interest and other
financial charges attributable to the acquisition of fixed assets.
Fixed assets acquired under finance leases are recognised at the lower of fair value of the leased assets at inception and the
present value of minimum lease payment. Lease payments are apportioned between the finance charge and the reduction of the
outstanding liability. The finance charge is allocated to periods during the lease term at a constant periodic rate of interest on the
remaining balance of the liability.
Depreciation is provided for as follows:
a) In respect of the assets of the Company’s Stamping Units at Kanhe, Nasik and Rudrapur, depreciation is provided on
Straight Line Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956, except as
stated in note b(ii) below.
b) In respect of all other units / divisions :
i) The Company provides depreciation on Straight Line Method in respect of buildings, railway sidings and plant and
machinery, heavy vehicles, other vehicles and data processing equipment, and on reducing balance method in respect
of furniture, fixtures and office equipment at the rates and in the manner specified in Schedule XIV to the Companies
Act, 1956, except as stated in note b(ii).
ii) The Company provides depreciation on Straight Line Method on heavy vehicles, other vehicles and data processing
equipment at 25%, 20% and 33% of cost respectively.
iii) In respect of extra shift, depreciation is provided on the basis of the actual utilisation of assets. In determining actual
utilisation, it has been assumed that the individual items of plant in each shop have worked for the same number of
hours as the main plant in that shop, except where separate records are maintained for any item.
When an asset is disposed off, the cost and related depreciation are removed from the books of account and the
resultant profit (including capital profit) or loss is reflected in the Profit and Loss Account.
(B) Intangible Assets
Software expenditure incurred is amortised over the period of 36 months equally commencing from the year in which the
expenditure is incurred.
3. Investments :
All long term investments are valued at cost. Provision for diminution is made to recognise a decline, other than temporary, in the value
of long term investments. Dividend income is recognised when the right to receive payment is established.
4. Inventories :
Inventories are stated at cost or net realisable value, whichever is lower. Cost of inventories is arrived at on a weighted average basis
and is inclusive of overheads and duties, where appropriate.
5. Foreign Exchange Transactions :
Foreign exchange transactions are initially recognised at the exchange rate prevailing on the transaction date. At each balance sheet
date foreign currency monetory items are translated at the relevant rates of exchange prevailing at the date. In respect of forward
contracts, the premium or discount arising at the inception of such a contract is amortised as expense or income over the life of the
contract.
In case of monetary items, the exchange differences are recognised in the Profit and Loss Account.
ANNUAL REPORT 2007-2008
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6. Miscellaneous Expenditure :
(to the extent not written off or adjusted)
i) Special payments under Voluntary Retirement Scheme are amortised over a period of five years from the accounting year in
which the liability is incurred.
ii) Expenditure incurred on major renovation and repairs of buildings is being written off over a period of five years from the year in
which the expenditure is incurred.
7. Revenue Recognition :
Sales of products and services are recognised when the products are shipped or the services rendered.
Excise Duties (including education cess) recovered are included in the Sale of Products (Gross). Excise Duty (including education
cess) in respect of Finished Goods are shown seperately as an item of Manufacturing and Other Expenses and included in the
valuation of finished goods.
8. Retirement Benefits :
i) Defined Contribution Plan:
Company’s contributions paid/payable during the year to Provident Fund, Officer’s Superannuation Fund, ESIC and Labour
Welfare Fund are recognised in the Profit and Loss Account.
ii) Defined Benefit Plan:
Company’s liability towards gratuity and compensated absences is determined using the projected unit credit method which
considers each period of service as giving rights to an additional unit of benefit entitlement and measure each unit separately to
build up the final obligation. Past services are recognised on straight line basis over the average period until the benefits become
vested. Actuarial gain and losses are recognised immediately in the statement of Profit and Loss Account as income or expense.
Obligation is measured at the present value of estimated future cash flow using discounted rate i.e. determined by reference to
market yield at the balance sheet date on government bonds where the currency and terms of the government bonds are
consistent with the currency and the estimated terms of the defined benefit obligation.
9. Taxes on income :
Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax assets and liabilities are
recognised, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting
income, that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets arising on
account of unabsorbed depreciation or carry forward of losses under tax laws are recognised only to the extent that there is virtual
certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets
can be realised. Deferred tax assets on account of other timing differences are recognised to the extent that there is a reasonable
certainty of its realisation.
10. Segment Reporting :
The accounting policies adopted for segment reporting are in line with the accounting policies of the Company and are identified having
regard to the dominant nature of risks and returns and internal organisation and management structure.
Revenues and expenses have been identified to the segments based on their relationship to the business activity of the segment.
Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to the business segments are reflected as
unallocated corporate expenses.
MAHINDRA UGINE STEEL COMPANY LIMITED
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Signature to Schedules ‘A’ to ‘N’ Keshub Mahindra ChairmanAnand G. Mahindra Vice ChairmanK. V. Ramarathnam Managing DirectorDeepak Dheer Executive DirectorDr. Homi N. SethnaM. R. Ramachandran
R. Sundaresan Ajay Kadhao R. R. Krishnan DirectorsExecutive Vice President - Finance & MIS Company Secretary Hemant Luthra
Rajeev DubeyMumbai : 29th April, 2008.
SCHEDULE ‘N’ ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956.
Balance Sheet Abstract and Company’s General Business Profile:
I. Registration Details
Registration No. 1 2 5 4 2 State Code 1 1
Balance Sheet Date 3 1 0 3 2 0 0 8
Date Month Year
II. Capital raised during the year (Amount in Rs. Crores)
Public Issue Rights Issue
N I L N I L
Bonus Issue Private Placement
N I L N I L
III. Position of Mobilisation and Deployment of funds (Amount in Rs. Crores)
Total Liabilities (including Shareholders’ Funds) Total Assets (including Miscellaneous Expenditure not written-off andadverse balance of profit and loss account)
7 1 3 . 8 2 7 1 3 . 8 2
Sources of Funds :
Paid-up Capital Reserves & Surplus
3 2 . 4 8 1 5 5 . 3 9
Secured Loans Unsecured Loans
1 7 8 . 4 9 1 3 8 . 1 1
Application of Funds :Net Fixed Assets Investments
2 9 2 . 4 0 0 . 4 2
Net Current Assets Miscellaneous Expenditure
2 2 9 . 8 0 0 . 0 3
Accumulated Losses
N I L
IV. Performance of Company (Amount in Rs. Crores) :
Turnover Total Expenditure(Sales and Other income) [Including decrease/(increase) in Stocks]
9 2 4 . 9 4 8 8 0 . 7 5
+/- Profit/Loss before Tax +/- Profit/Loss after Tax
4 4 . 1 9 2 9 . 4 9
Earnings per Share in Rupees Dividend Rate %
9 . 0 8 3 0
V. Generic Names of Three Principal Products/Services of Company (as per monetary terms) :
Item Code No. (ITC Code) 7228
Product Description Other bars and rods of other alloy steel
Item Code No. (ITC Code) 8708
Product Description Parts and accessories of motor vehicles
Item Code No. (ITC Code) 7214
Product Description Other bars and rods of iron or non-alloy steel
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MAHINDRA UGINE STEEL COMPANY LIMITEDRegistered Office : 74, Ganesh Apartment, Opp. Sitaladevi Temple,
L. J. Road, Mahim, Mumbai - 400 016.
Attendance Slip
I hereby record my presence at the 45th Annual General Meeting of the Company at Amar Gian Grover Auditorium,
Lala Lajpat Rai Memorial Trust, Lala Lajpat Rai Marg, Haji Ali, Mumbai – 400 034 on Thursday, the 24th July,
2008 at 3.00 p.m.
Name of the Member
Registered Folio No. No. of Shares
Client ID No.
DP ID No.
Name of the Proxy
Signature of the Member or Proxy
Note: The Member/Proxy/Representative attending the 45th Annual General Meeting is requested to bring this slipduly filled in and present the same at the entrance to the Meeting.
MAHINDRA UGINE STEEL COMPANY LIMITEDRegistered Office : 74, Ganesh Apartment, Opp. Sitaladevi Temple,
L. J. Road, Mahim, Mumbai - 400 016.
Proxy Form
I/We ................................................................................... of ......................................................................................
in the District of .............................................................................. being a member/members of the above named
Company
hereby appoint .................................................................. of ......................................................................................
in the District of .................................................... or failing him/her ..........................................................................
of ............................................................................ in the district of ........................................................................as
my/our proxy/proxies to vote for me/us on my/our behalf at the 45th Annual General Meeting of the Company to be
held at Amar Gian Grover Auditorium, Lala Lajpat Rai Memorial Trust, Lala Lajpat Rai Marg, Haji Ali,
Mumbai – 400 034 on Thursday, the 24th July, 2008 at 3.00 p.m. and at any adjournment thereof.
Signed this .......................................................day of .......................................2008
Registered Folio No. .................................
Client ID No. .............................................
DP ID No. .................................................
No. of Shares ...........................................
Note : This Proxy Form in order to be effective should be duly filled in, stamped and signed and must bedeposited at the Registered Office of the Company not less than 48 hours before the time for holding the meeting.The Proxy need not be a member of the Company.
Fifteen
Paise
Revenue
Stamp
Signature of the Member
✄